- Fair price; medium-term positive. SOP has proposed to buy the minority stakes in two of its plantation subsidiaries for MYR243m cash. These subsidiaries own 22,326ha of planted oil palm estates with an average age of ~3 years. At an average EV/planted hectare of MYR41,300, the transaction price appears fair. Earnings will be enhanced in the medium term once the young trees reach maturity, but will see a slight dilution in the next 1-2 years. We maintain our earnings forecasts for now. Reiterate BUY with an MYR8.00 TP on 13x FY13 PER. Trading at an FY13 PER of 10x, SOP remains undervalued.
Source: Maybank Research - 13 Sept 2012
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