CB Industrial Product - Buys 14,347ha of land in Central Kalimantan Buy

- CB Industrial Product Holding Bhd (CBIP) has proposed to acquire 94% of PT GAS for RM6.3mil or Rp18.8bil. 

- PT GAS has been granted a land with total area of 14,347ha in Central Kalimantan. 

- The land comprises 14,049ha of “Convertible Production Forest” and 298ha of “Other Purpose Area”.

- The purchase price of RM6.3mil was roughly based on a consideration of RM605/ha for the “Other Purpose Area” land and RM437/ha for the “Convertible Production Forest” land. 

- According to CBIP’s Bursa Announcement, a “Convertible Production Forest” land must apply for a relinquishment of forest area to the Minister of Forestry and be granted with a “Hak Guna Usaha” before it can be planted whereas an “Other Purpose Area” land does not require applying for a relinquishment of forest area.

- We view the proposed acquisition positively as it would expand CBIP’s plantation landbank in Indonesia.

- Currently, the group has about 37,273ha of land in Kalimantan. 

- Out of these, an estimated 33,000ha is plantable with palm oil. 

- Apart from these, CBIP also owns stakes in associates, which have 26,422ha of land in total.

- With PT GAS, CBIP’s landbank would increase to 51,620ha. 

- We consider the purchase price of RM437/ha to RM605/ha fair. CBIP’s previous acquisitions of landbank in Indonesia were roughly at RM703/ha.

- Presently, CBIP is preparing nurseries for its oil palm estates in Kalimantan. The group plans to plant about 3,000ha to 5,000ha of land with oil palm each year.

- We maintain a BUY on CBIP for its growing mill construction order book and undemanding valuations.  

Source: AmeSecurities