Analysts positive on Genting Plantations prospects for Johor Premium Outlets

KUALA LUMPUR: Analysts at MIDF Amanah Investment Bank Bhd (MIDF Research) are positive on the prospects of Genting Plantations Bhd’s (Genp) Johor Premium Outlets (JPO) 50:50 joint venture (JV) with Simon Property Group (SPG).

Coming back from a visit to JPO, the analysts guided that they were positive on the retail asset’s prospects due to its high occupancy rates of over 90 per cent and Genp’s plans to further expand the luxury mall.

Recall that JPO first opened its doors at the end of 2011 and following the success of its Phase 1, JPO Phase 2 was completed on 2013, now the most recent expansion will come in the form of JPO Phase 3 which will add another 40,000 to 50,000 sq ft of net lettable area (NLA) to the asset and has a target completion date of the end of 2018.

Overall, JPO sits upon 45 acres of land, houses more than 130 designers and brand name stores offering savings of up to 65 per cent each day and has a current figure of 269,000 sq ft NLA.

Once JPO Phase 3 is completed, the expansion is expected help drive up the profit contribution of JPO for Genp which has already seen significant improvement of late.

In financial eyar 2017 (FY17), the Genting-Simon JV contributed a profit before tax (PBT) of RM30.3 million which is 6.6 per cent of Genp’s PBT and a 44 per cent year over year (y-o-y) improvement.

Genting-Simon JV PBT includes the profit from both JPO and Genting Highlands Premium Outlets.

But besides its retail assets, MDIF Research also adds that Genp’s plantation business is also looking well as its Fresh fruit Bunch (FFB) growth is estimated to grow by 13 per cent y-o-y this year - one of the strongest growth among planters under the analyst’s coverage.

“This is due to new contribution from recently acquired estate of 12,893 ha and ,5000 ha coming to maturity in Indonesia.

“In the first half of FY18 (1HFY18), Genp’s FFB volume has grown by 12 per cent y-o-y to 965,035 tonnes,” said the analyst.

All in, MIDF Research is maintain their FY18-19 core net income forecasts of RM302 and RM347 million respectively, with key assumptions being that the average crude palm oil prices (CPO) will be RM2,400 and RM2,430 for FY18 and FY19.

The research arm maintains their ‘Buy’ call for Genp with a sum-of-parts target price of RM11.00.

JPO first opened its doors at the end of 2011 and following the success of its Phase 1, JPO Phase 2 was completed on 2013, now the most recent expansion will come in the form of JPO Phase 3 which will add another 40,000 to 50,000 sq ft of NLA to the...