2/9/06 (The Star)   -  KUALA LUMPUR: Kumpulan Guthrie Bhd is looking to raise US$200mil–US$300mil by listing its Minamas Indonesia unit next year, as it ramps up palm oil production.

Guthrie, with two-thirds of its plantations in Indonesia, plans to sell up to 49% of Minamas to seize on rising palm oil prices, buy more land and cut debts.

The company was planning to list Minamas as early as July next year, probably on the Jakarta Stock Exchange, said group executive director Datuk Abdul Wahab Maskan.

“For the last two years and going into the third year, investors will see that what we promised to deliver on Minamas, we delivered,” Wahab said in an interview yesterday. “That's very important. It gives confidence to people when we start talking about forecasts.”

 
Assuming Guthrie sells 49%, proceeds of US$200mil–US$300mil would value Minamas at US$410mil–US$610mil, or around 10 to 16 times Minamas' 2005 operating profit of (US$40mil). Wahab said the price was justified as its Indonesian plantations matured and yields improved.

He declined to discuss the size of the stake it planned to sell, but said it would seek to retain control.

Malaysia's top planter, IOI Corp Bhd, trades at around 23 times current earnings, with Guthrie at around 21 times.

One analyst said the implied valuation was justifiable.

“Yields are coming up in Indonesia. The plantations there are commanding a high premium and the listed sector is not as deep as in Malaysia,” said Niklas Olausson, research head of CLSA.

“That's what will explain the high potential historical multiples. If you were bullish on crude palm oil prices I would imagine that this IPO will be taken up quite easily. There's a potential growth story there,'' Olausson said.

The IPO cash would help Guthrie cut debt of some RM2.8bil to about RM2.5bil next year, Wahab said.

The cash from the listing would also help pay for a 20% expansion in plantation land in Malaysia, where Guthrie has about 100,000ha already planted.

But Wahab suggested he was happy with the size of Guthrie's Indonesian estate of roughly 200,000 planted hectares, describing it as “suitable”.

The IPO cash, combined with strong earnings, would also give Guthrie freedom to raise its dividend payouts, Wahab said. It currently has a gross dividend payout of about 10%. – Reuters