In the first part of the two-part series, we highlighted Chip Eng Seng, Banyan Tree and Samudera Shipping.
In this second part of the two-part series, we will be focusing on Bumitama Agri, Keppel T&T, and Aspen Group.
4. Bumitama Agri
For investors who are looking for a proxy to the next crude palm oil price rally, Bumitama Agri will be the top choice, according to RHB Research.
The company recorded a strong Fresh Fruit Bunch (FFB) output growth of 55.9% year-on-year in 1H17 and analysts projected FY17 growth to hit 25%.
Because of its FFB output growth, RHB Research thinks Bumitama is undervalued by traditional metrics. It is currently trading at an EV/ha of US$7,700/ha, below its new planting cost of US$8,000-10,000/ha.
Management unlocking value for shareholders
Bumitama Agri currently has a dividend policy of a minimum 20% net payout.
Now that replanting costs have dropped, Bumitama Agri’s management expressed their intentions to increase its dividend policy to as high as 50%.
That would double Bumitama Agri’s current dividend yield to 4.0%. Bumitama Agri’s management has also been embarking on a share buyback programme and has about 13 million shares held in treasury.
The management reasoned that the market is currently undervaluing its shares, particularly given the fact that it is trading below the replacement value.
RHB Research: Bumitama Agri Limited (SGX: P8Z) – BUY; $0.85
5. Keppel T&T
Pipeline of deals ahead for datacentre
One of Keppel T&T’s key segment is the data centre segment. Having injected KDC SG3 into Keppel DC REIT, Keppel T&T saw a fall in facility management fees and development fee.
UOB Kay Hian Research (UOBKH) thinks Keppel T&T’s data centre segment will return to profitability with new datacentre deals and increasing occupancy from its current datacentre assets in the near future.
UOBKH notes that existing assets such as KDC SG4 and the Frankfurt datacentre will pick up on its occupancy, given the strong demand.
UOBKH also highlights that Canada Pension Plan Investment Board has allocated US$350 million for partnership with Keppel T&T’s Alpha DC Fund.
That will lead to higher development fees as well as an increase in recurring management fees and rental income.
Logistics division on a turnaround
Keppel T&T’s logistics division is undergoing transformation to become profitable once again.
Its Tianjin facility has ramped up nicely, while its Lu’an facility is expected to start within 1H18.
UOBKH notes that Keppel T&T’s logistics division is turning around with its Courex omnichannel logistics on track to perform.
UOBKH: Keppel Telecommunications & Transportation Limited (SGX: K11) – BUY; $1.90
6. Aspen Group
Property play in Penang
Aspen Group is a property play that focuses on affordable residential and mixed-use property projects in Penang. Aspen Group currently has four ongoing launched projects in Penang.
Aspen Group is an early mover in affordable housing, where RHB Research notes that demand is growing.
Aspen Group also offers home packages offering fully-furnished homes at a reasonable and affordable price via “convenient home loans”.
Aspen Vision City: The key project to unlocking value for Aspen
One of the share price catalysts for Aspen Group is its flagship project: Aspen Vision City (AVC). AVC is a mixed-use project jointly built with Ikano Pte Ltd.
Analysts view AVC as an upcoming eco-metropolis with a mix of residential, office, commercial and retail spaces, as well as hotels, hospitals, international schools, and parks.
Ikano, which owns the franchise rights to own and operate IKEA stores in South-East Asia, is developing the first IKEA store in northern West Malaysia within AVC.
According to RHB Research’s past observations, the opening of IKEA outlets in Malaysia has boosted population density, property demand and real estate values in the surrounding areas.
RHB Research: Aspen Group Holdings Limited (SGX: 1F3) – BUY; $0.31