Analysts positive on Eonmetall-Felda BOOT deal

KUALA LUMPUR: Eonmetall Group Bhd’s (Eonmetall) build, operate own and transfer (BOOT) arrangement with Felda Palm Industries Bhd (Felda) garnered positive views from analysts as Eonmetall could gain financial benefit from the deal.

In a filing to Bursa Malaysia, Eonmetall announced that via its wholly-owned subsidiary Eonmetall Carotene Oil Sdn Bhd (ECOSB), it had entered into a BOOT deal with Felda.

The BOOT arrangement entails granting and authorising, on an exclusive basis, ECOSB to design, engineer, finance, construct, commission, own, operate, transfer, maintain, and management palm fibre oil extraction (PFOE) plant on a BOOT basis at six selected mill locations as designated by Felda.

ECOSB and Felda will then enter into six separate arrangements to formalise the BOOT arrangement for all plants at the first phase mill.

“We are positive on the latest development. Eonmetall has effectively delivered what it guided, which is concluding a major deal with a major planter involving the investment in several PFOE plants on a concession basis.

“Eonmetall will get two bites at the cherry profits from fabrication of the plants, and recurring profits from the sale of the residual palm oil extracted over 10 years,” AmInvestment Bank Bhd’s research arm (AmInvestment) said.

Looking ahead, the research team believed that the next phase of growth for its solvent oil extraction plant business could come from the introduction of the concession model.

“The model is attractive to palm oil mill owners as it requires minimal capital outlay from them as Eonmetall will fund the construction cost of the solvent oil extraction plant in exchange for profit sharing,” it added.

All in, AmInvestment pegged a ‘buy’ call on the stock and explained: “We continue to like Eonmetall for the growing acceptance by palm oil millers in Malaysia and Indonesia for its solvent oil extraction plants.