Wednesday September 19, 2012
Kenanga bullish on TSH’s acquisition of Pontian United
PETALING JAYA: Kenanga Research has raised its target price for TSH Resources Bhd to RM2.95 from RM2.85 and maintained its “outperform” call as it saw value in the firm’s acquisition of Pontian United Plantations Bhd.
“We are positive on the deal as we deem it as earnings per share (EPS)-accretive.
“Its financial year 2013 (FY13) EPS should improve 3% as the net income increase of 5% to RM158mil will surpass the share base dilution of 3% to 845.4 million shares.
“Further benefit can be realised as Pontian United’s plantation landbank is located very near to TSH’s landbank in Lahad Datu, Sabah,” it said in a note to investors.
TSH announced last Friday it had secured a direct 20.2% interest in Pontian United, making it the latter’s single largest shareholder after raising its stake by 12.25% from 7.96% prior to the takeover offer.
TSH, as well as Chin Leong Thye Sdn Bhd, Lee Chin Hwa, Lee Min Huat and Lee Sep Pian had in June jointly offered to buy the shares they did not own in Pontian United for RM90 a share.
It is learnt that the RM90 is to be satisfied by RM45.06 in cash and RM44.94 in TSH shares at RM2.14 apiece.
Kenanga Research said TSH’s fundamental’s were healthy with a strong fresh fruit bunch (FFB) growth of 12% to 30% expected in FY12 to FY13.
It added that TSH’s long-term outlook remained positive as the brokerage believes it can sustain a five-year FFB compounded annual growth rate of 16% as its Kalimantan estates mature.
“We continue to like TSH for its young age profile of around 6.2 years which is the youngest for planters under our coverage,” the research house said.