BERNAMA – GENTING PLANTATIONS’ LAND ACQUISITION IN JAKARTA WILL IMPACT NET DEBT AND EARNINGS IN FINANCIAL YEAR 2025

KUALA LUMPUR, July 22 (Bernama) — New land acquisitions by Genting Plantations Bhd through its indirect wholly owned Indonesian subsidiaries will impact the company’s net debt and net indebtedness in the financial year 2025 (FY2025), research firms said.

Genting Plantations units have acquired two adjacent plots of land in Jakarta totaling 152 hectares for Rp 2.052 trillion (Rp 593 million) to undertake real estate development activities in line with its expansion objective in Indonesia.

PT Genting Properti Abadi is buying 80 hectares of land in Sentul City, West Java, Indonesia for RM509.8 million, while PT Genting Properti Jaya is buying a 72-hectare plot of land adjacent to the former site for RM83.2 million.

The proposed acquisitions are expected to close in the first quarter of 2025.

Kenanga Investment Bank Bhd said in a note that the acquisition will increase the company’s estimated net debt by the end of financial year 2025 from RM1.23 billion (22% of net debt) to RM1.58 billion (29% of net debt), which is still quite contained and manageable.

“We believe that Genting Plantations is likely to be setting the stage for another Premium Outlet opening in the Greater Jakarta region, and the opening of such a facility could lead to an increase in demand for real estate.

“Accordingly, we are lowering our fiscal year 2025 earnings forecast by three percent to reflect higher financing costs, while property sales in Sentul City are unlikely to occur during the forecast period,” the release said.

Consequently, Kenanga Investment maintained its Market Perform forecast for the company and set a target price of RM6.00.

Meanwhile, Maybank Investment Bank Bhd also maintained its profit forecast as the land acquisition will increase Genting Plantations’ proforma net gearing ratio (as at end-March 2024) from 22 per cent to 34 per cent if the entire purchase amount is paid upfront.

On the other hand, Hong Leong Investment Bank Bhd noted that the recent proposed acquisitions will result in Genting Plantations’ net debt and net gearing ratio increasing to RM1.7 billion and 0.32 times from RM1.2 billion and 0.22 times as at March 3, 2024.

“On the other hand, the impact on earnings in the near term is likely to be small.

“For now, we maintain our earnings forecasts with a target price of RM5.80 and a ‘hold’ rating on Genting Plantations, pending further information from the management,” the statement said.

— BERNAMA

BERNAMA provides up-to-date, reliable and comprehensive news and information which is distributed through BERNAMA Wires; www.bernama.com; BERNAMA TV on Astro 502, unifi TV 631 and MYTV 121 channels and BERNAMA Radio on FM93.9 (Klang Valley), FM107.5 (Johor Bahru), FM107.9 (Kota Kinabalu) and FM100.9 (Kuching).

Follow us on social media:
Facebook : @bernamaofficial, @bernamatv, @bernamaradio
Twitter: @bernama.com, @BernamaTV, @bernamaradio
Instagram: @bernamaofficial, @bernamatvofficial, @bernamaradioofficial
TIK Tok : @bernamaofficial