GENTING PLANTATIONS Diversification into the Vegetable Seeds Business
DESCRIPTION
One of the leading Malaysian plantation players, which is involved in property, retailing and biotechnology sectors.
12-Month Target Price
Current Price: RM4.95
Expected Return: +13.3%
Previous Target Price: RM5.61
Market
Sector: Plantations
Bursa Code: 2291
Bloomberg Ticker: GENP MK
Shariah-compliant: Yes
SHARE PRICE CHART
(Share price chart diagram is not included as per instructions)
The chart indicates price movements from Mar-25 to Aug-25, ranging from approximately RM4.40 to RM5.40.
52 Week Range (RM)
4.75-5.79
3-Month Average Vol (‘000)
149.9
SHARE PRICE PERFORMANCE
| 1M | 3M | 6M | |
|---|---|---|---|
| Absolute Returns | -2.0 | -1.0 | -10.5 |
| Relative Returns | -5.6 | -1.0 | -10.1 |
KEY STOCK DATA
Market Capitalisation (RM m)
4,441.0
No. of Shares (m)
897.2
MAJOR SHAREHOLDERS
| % | |
|---|---|
| Genting Bhd | 54.4 |
| Employees Provident Fund | 13.5 |
| Kumpulan Wang Persaraan | 7.6 |
Diversification into the Vegetable Seeds Business
Genting Plantations (GENP) is planning to venture into the vegetable seeds business by collaborating with China-based Shouguang Vegetable Science and Technology S/B. In our view, the 60:40 proposed JV business could help create new income stream for the group in the future. Riding on the latter’s vast experience, it could help accelerate the development. Separately, the 2QFY25 results are scheduled to be released on 27th Aug 2025 and we expect another solid performance, underpinned by steady CPO prices and moderate FFB production growth. We reiterate our Outperform call with an unchanged SOP-based target price of RM5.61.
- ● JV with China’s Shouguang Vegetables. Under the JV agreement, GENP will form two JV companies with Shouguang Vegetable Science and Technology S/B (SVST). GENP will hold 60% via AGCT Vegetable AgVentures S/B while SVST will hold 40% in both JV companies. The project scope will include the development of a 70-acre Centre of Excellence in Kulai, Johor, covering i) R&D facilities for tropical vegetable seeds, ii) greenhouses for crop cultivation, iii) showcase centre for agri-tech innovation and iv) a processing plant for imports/exports of agri-products. The estimated total investment is around RM525m, with 40% allocated for the JV Technology Company, and the remaining 60% for the JV Operating Company.
- ● Background of Shouguang Vegetable Industry Group. Shouguang Vegetables Agriculture Technology Co, which in turn is an indirect wholly-owned unit of Shandong Shouguang Vegetable Industry Group Co. Established in 1988, the company plays a vital role in China’s agricultural industrialisation. Its operations cover the entire value chain of the vegetable industry- from seed R&D, seedling propagation, and greenhouse cultivation to processing, logistics, e-commerce, wholesale and food manufacturing. Shandong Shouguang Vegetable Industry Group owns several in-house brands, including “Seven Colour Manor” and “Wangpo Cantaloupe”. In addition, many crops cultivated by the company are recognised as either China Geographical Indication or National Geographical Indication agricultural products such as Shouguang leek and Guihe celery. It also became the first regional public trademark in China for all vegetables produced in Shouguang, China, by successfully registering the trademark of “Shouguang Vegetables”.
- ● Rationale of the new venture. The new business venture will help GENP reduce its high dependency on the upstream palm oil business, and help unlock a new recurring revenue stream in the high-value vegetable crops segment. GENP plans to fund the business via internal funds and bank borrowings, which should not be an issue given its current low gearing position of 0.23x and large cash pile of RM1.9bn. Based on GENP’s 60% stake in both JV companies, GENP is required to fork out about RM315m.
KEY FINANCIAL SUMMARY
| FYE Dec (RM m) | 2023A | 2024A | 2025F | 2026F | 2027F | CAGR |
|---|---|---|---|---|---|---|
| Revenue | 2,966.4 | 2,937.9 | 3,757.0 | 3,771.9 | 3,786.8 | 8.8% |
| Gross Profit | 747.9 | 819.7 | 847.5 | 852.1 | 856.7 | 1.5% |
| Pre-tax Profit | 384.0 | 480.7 | 471.1 | 473.8 | 479.5 | -0.1% |
| Core Net Profit | 254.0 | 323.1 | 329.4 | 331.3 | 335.3 | 1.2% |
| EPS (Sen) | 28.3 | 36.0 | 36.7 | 36.9 | 37.4 | 1.2% |
| P/E (x) | 17.5 | 13.7 | 13.5 | 13.4 | 13.2 | |
| DPS (Sen) | 21.0 | 25.0 | 23.1 | 23.3 | 23.5 | |
| Dividend Yield (%) | 4.2 | 5.1 | 4.7 | 4.7 | 4.8 |
Source: Company, PublicInvest Research estimates
Figure 1: Structure of the Proposed JV
(Diagram representing the structure is not included as per instructions. Key entities and relationships are described below.)
Parent Entities:
- GENTING PLANTATIONS (holds 100% of ACGT Vegetable AgVentures Sdn Bhd (“AVA”))
- Shouguang Vegetable (Guangzhou) Agriculture Technology Co. Ltd (holds 100% of Shouguang Vegetable Science and Technology Sdn Bhd (“SVST”))
Joint Venture Companies:
- JV Technology Co:
- AVA contributes 60% (RM126 million)
- SVST contributes 40% (Technology, know-how & expertise)
- Intended paid up capital: RM210,001,000
- JV Operating Co:
- AVA contributes 60% (RM189 million)
- SVST contributes 40% (RM126 million)
- Intended paid up capital: RM315,001,000
Table 1: SOP-based Valuations
| SOP Valuations | Valuation Basis | Value (RMm) | RM/share |
|---|---|---|---|
| Plantations | 15x FY26 EPS | 5,557.6 | 6.19 |
| Property | 80% discount to RNAV | 716.4 | 0.80 |
| Net cash / (debt) | As at FY24 | -1,240.2 | -1.38 |
| Existing no of shares (m) | 897.2 | ||
| Fully Diluted SOP (RM/share) | 5,033.8 | 5.61 |
Source: Bloomberg, PublicInvest Research
KEY FINANCIAL DATA
INCOME STATEMENT DATA
| FYE Dec (RM m) | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Revenue | 2,966.4 | 2,937.9 | 3,757.0 | 3,771.9 | 3,786.8 |
| Gross Profit | 747.9 | 819.7 | 847.5 | 852.1 | 856.7 |
| Other operating expenses | -299.8 | -258.9 | -302.6 | -306.5 | -307.4 |
| Operating profit | 448.1 | 560.8 | 544.9 | 545.6 | 549.4 |
| Finance cost | -106.7 | -123.6 | -121.6 | -119.7 | -117.7 |
| Associates & affiliates | 42.6 | 43.5 | 47.9 | 47.9 | 47.9 |
| Pre-tax Profit | 384.0 | 480.7 | 471.1 | 473.8 | 479.5 |
| Income Tax | -118.3 | -145.7 | -113.1 | -113.7 | -115.1 |
| Effective Tax Rate (%) | 30.8 | 30.3 | 24.0 | 24.0 | 24.0 |
| Minorities | -12.3 | -11.9 | -28.6 | -28.8 | -29.2 |
| Core Net Profit | 254.0 | 323.1 | 329.4 | 331.3 | 335.3 |
Growth (%)
| 2023A | 2024A | 2025F | 2026F | 2027F | |
|---|---|---|---|---|---|
| Revenue | -7.0 | -1.0 | 27.9 | 0.4 | 0.4 |
| Operating Profit | -25.0 | 9.6 | 3.4 | 0.5 | 0.5 |
| Core Net Profit | -45.4 | 26.1 | 6.9 | 0.6 | 1.2 |
Source: Company, PublicInvest Research estimates
BALANCE SHEET DATA
| FYE Dec (RM m) | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Fixed assets | 4,628.7 | 4,472.8 | 4,551.9 | 4,613.5 | 4,657.7 |
| Other long-term assets | 2,051.4 | 2,112.9 | 2,112.9 | 2,112.9 | 2,112.9 |
| Cash at bank | 1,072.4 | 1,903.9 | 1,804.1 | 1,823.4 | 1,861.7 |
| Other current assets | 814.5 | 1,134.6 | 1,434.2 | 1,439.2 | 1,444.2 |
| Total Assets | 8,567.0 | 9,624.2 | 9,903.2 | 9,989.0 | 10,076.5 |
| Short-term borrowings | 528.5 | 1,677.9 | 1,677.9 | 1,677.9 | 1,677.9 |
| Long-term borrowings | 1,554.3 | 1,466.2 | 1,416.2 | 1,366.2 | 1,316.2 |
| Payables | 476.1 | 550.8 | 747.3 | 749.9 | 752.5 |
| Other liabilities | 573.3 | 597.3 | 597.3 | 597.3 | 597.3 |
| Total Liabilities | 3,132.2 | 4,292.2 | 4,438.7 | 4,391.3 | 4,343.9 |
| Shareholder Equity | 5,434.8 | 5,332.0 | 5,464.5 | 5,597.7 | 5,732.6 |
| Total Equity and Liabilities | 8,567.0 | 9,624.2 | 9,903.2 | 9,989.0 | 10,076.5 |
Source: Company, PublicInvest Research estimates
PER SHARE DATA & RATIOS
| FYE Dec | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Book Value Per Share (RM) | 5.9 | 5.9 | 6.0 | 6.2 | 6.3 |
| NTA Per Share (RM) | 5.9 | 5.9 | 6.0 | 6.2 | 6.3 |
| EPS (sen) | 28.3 | 36.0 | 36.7 | 36.9 | 37.4 |
| DPS (sen) | 21.0 | 25.0 | 23.1 | 23.3 | 23.5 |
| Payout Ratio (%) | 70.9 | 66.9 | 63.0 | 63.0 | 63.0 |
| ROA (%) | 3.1 | 3.5 | 3.6 | 3.6 | 3.6 |
| ROE (%) | 5.0 | 6.4 | 6.6 | 6.5 | 6.5 |
Source: Company, PublicInvest Research estimates
T 603 2268 3015
F 603 2268 3014
E chonghoeleong@publicinvestbank.com.my
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