Stock Name: KLK
Company Name: KUALA LUMPUR KEPONG BHD
Research House: RHB
KUALA LUMPUR: RHB Research Institute is maintaining its sum-of-parts based fair value of RM24.35 for KUALA LUMPUR KEPONG BHD [] (KLK).
'We maintain our Market Perform recommendation on the stock,' it said on Monday, April 25.
Last Friday, KLK announced its unit, KL-Kepong Industrial Holdings Sdn Bhd disposed of its remaining 40% interest in cocoa processor, Barry Callebut Malaysia Sdn Bhd (BCM) to Luijckx BV (a member of the Barry Callebaut group of companies) for a cash consideration of RM117.69m. With this disposal, BCM is no longer an associate of KLK.
'This sale was part of an option agreement made in 2008, when KLK sold the initial 60% stake back in 2008 for RM156.3m. The sale of the remaining 40% stake for RM117.7m, however, implies a higher price of RM294m for the company, 13% higher than the transacted price in 2008,' it said.
RHB Research said it was positive on this development, as this would imply a higher pricing in terms of PE, given that back in 2008, the selling price for the 60% stake implied a PE of approximately 7-8 times. It estimated this disposal would reduce KLK's net earnings by less than 1% p.a.
However, the main risks include: (1) a convincing reversal in crude oil price trend resulting in reversal of CPO and other vegetable oils price trend; (2) weather abnormalities resulting in an over or under supply of vegetable oils; (3) revision in global biofuel mandates and trans-fat policies; and (4) a slower-than-expected global economic recovery, resulting in lowerthan-expected demand for vegetable oils.
Company Name: KUALA LUMPUR KEPONG BHD
Research House: RHB
KUALA LUMPUR: RHB Research Institute is maintaining its sum-of-parts based fair value of RM24.35 for KUALA LUMPUR KEPONG BHD [] (KLK).
'We maintain our Market Perform recommendation on the stock,' it said on Monday, April 25.
Last Friday, KLK announced its unit, KL-Kepong Industrial Holdings Sdn Bhd disposed of its remaining 40% interest in cocoa processor, Barry Callebut Malaysia Sdn Bhd (BCM) to Luijckx BV (a member of the Barry Callebaut group of companies) for a cash consideration of RM117.69m. With this disposal, BCM is no longer an associate of KLK.
'This sale was part of an option agreement made in 2008, when KLK sold the initial 60% stake back in 2008 for RM156.3m. The sale of the remaining 40% stake for RM117.7m, however, implies a higher price of RM294m for the company, 13% higher than the transacted price in 2008,' it said.
RHB Research said it was positive on this development, as this would imply a higher pricing in terms of PE, given that back in 2008, the selling price for the 60% stake implied a PE of approximately 7-8 times. It estimated this disposal would reduce KLK's net earnings by less than 1% p.a.
However, the main risks include: (1) a convincing reversal in crude oil price trend resulting in reversal of CPO and other vegetable oils price trend; (2) weather abnormalities resulting in an over or under supply of vegetable oils; (3) revision in global biofuel mandates and trans-fat policies; and (4) a slower-than-expected global economic recovery, resulting in lowerthan-expected demand for vegetable oils.
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