Company Name: KUALA LUMPUR KEPONG BHD
Research House: ECMLIBRA
The acquisition of 7,177 hectares will add to the 133,114-hectare oil palm landbank of Kuala Lumpur Kepong Bhd (KLK) in Indonesia, according to ECM Libra Investment Research.
KLK announced yesterday its subsidiary KL-Kepong Plantation Holdings Sdn Bhd was buying 95 per cent of PT Bumi Makmur Sejahtera Jaya (PTBMS) from Tjong Hasan Agus Salim and Tjhang Ardy Fadrinata.
PTBMS holds two certificates of Izin Lokasi for land measuring 2,336.62 hectares in Desa Mentawak and Desa Air Kelik, Kecamatan Kepala Kampit, Belitung Timur, and another 4,840 hectares in Desa Lilangan, Desa Limbongan, Desa Jangkar Asam, and Desa Gantung, Kecamatan Gantung, Belitung Timur.
"In terms of purchase price for the Izin Lokasi (location permit) land, the purchase price comes up to roughly RM12,300 per hectare," ECM Libra Investment said in an equity note today.
"Generally, RM12,000 per hectare for green-field land is a reasonable price to pay, whether in Malaysia or in Indonesia," it said.
ECM Libra Investment said that KLK has a planting target of 15,000 hectares per annum.
"With its current unplanted landbank in Indonesia (including the acquisition) and assuming no new acquisitions, the group will take 4.2 more years to complete planting. Major maturities in Indonesia will kick in two to three years' time," it said.
ECM Libra Investment said it continued to have a "buy" on KLK with a target price of RM21.70. -- Bernama