IPO - Tanah Makmur

It is a small-mid cap oil palm planter and township developer in Pahang.

 

A fair value implies 8.4 to 8.9 times financial year Dec 31, 2014 (FY14) to FY15 earnings per share (EPS) based on RM1.25 IPO price. The price implied that Tanah Makmur was trading below peers’ valuation of 11 to 13 times FY14 -15 EPS. However, its price-to-book value multiple is on par with peers at 1.0 to 1.1 times FY14 -15 book value.

Tanah Makmur’s FY13 revenue was contributed by plantation (37%), milling (37%) and property (26%).

Tanah Makmur had its roots in Kurnia Setia which was taken private in 2010 and was later restructured and diversified.

Currently, Tanah Makmur owns and manages 18,000 ha palm oil estates and a palm oil mill in Pahang while is also a leading township developer in Kuantan.

Tanah Makmur was also awaiting approval to acquire 2,600 ha of plantation land adjacent to its estates, which would increase its landbank by 15%.

Tanah Makmur has developed about RM300mil gross development value (GDV) of its 1,500-acre KotaSAS township project, which is expected to generate another RM1.5bil GDV over the next 15 years from 2014.

The construction and relocation of the a state administrative complex and the state assembly hall to KotaSAS will be a near-term catalyst for its property segment.