PETALING JAYA: IOI Corp Bhd associate company Bumitama Agri Ltd closed 31.5% higher to S$0.98 on its debut on the Singapore Exchange (SGX).
IOI Corp has a 30.4% stake in its Indonesian plantation associate.
Bumitama shares also reached an intraday high of S$1.02 yesterday.
Based on its closing stock price, Bumitama has a market capitalisation S$1.72bil (RM4.21bil).
Affin Investment Bank noted in a report that Bumitama's initial public offering (IPO) price of S$0.745 was attractive, based on net profit estimates.
“The IPO offer price implies 2012 and 2013 price to earnings ratio (PER) of 12.7 times and 11.1 times, which are attractive compared with SGX-listed plantation peers and also in view of the potential for further expansion of planted areas and growth in yields over the next five years,” it said.
According to Affin Investment, when pegged against the peers' 2013 PER range of 11.9 times to 16.4 times, Bumitama's stock could potentially trade up to between S$0.80 to S$1.10 for gains of 7.4% to 47.7%.
The research unit pointed out that Bumitama owned and controlled 191,561ha of plantation area, with a total of 119,162ha planted and 74,250 ha matured.
“Of the matured areas, 56.5% are in the young category (four to six years) and 43.5% in the prime category (seven to 18 years), giving a relatively low average age of five years. Plantable reserve is 62,786 ha, which the group intends to develop at a rate of 13,000 ha per annum.”
Affin Investment said based on the IPO price and after taking into account the acquisition cost of US$72.2mil (RM221.6mil) for Bumitama in November 2007, IOI Corp was expected to record a paper gain of US$244mil (or RM748mil).
“This paper gain on its stake in Bumitama is equivalent to 11.5 sen per share.”
On the local bourse, IOI Corp stock closed unchanged at RM5.40.