Boustead Holdings Bhd

(BSTEAD, 2771)

Boustead Holdings Bhd (Trading BUY)

• BSTEAD, as a conglomerate, appears undervalued on a sum-of-parts basis. The aggregate of its share
of market cap in the listed subsidiaries and associate – namely Pharmaniaga (56% stake), Boustead
Plantations (57% stake), BHIC (65% stake) and Affin Bank (21% stake) – works out to be RM2.03bn
currently, which easily surpasses BSTEAD existing market cap of RM1.35bn. This has yet to take into
consideration the valuations of its unlisted property assets (including valuable land bank).
• BSTEAD is also an indirect proxy to the Covid-19 vaccine thematic play and rising CPO prices, which have
lifted the share prices of Pharmaniaga (up 94% since mid-July) and Boustead Plantations (+38% since
end-August), respectively.
• Meanwhile, its major shareholder LTAT (which holds a 59.4% stake) could be deciding on whether to
proceed with the preliminary proposal to take BSTEAD private – at an indicative price of RM0.80 per
share – by 27 October 2020.
• From a trough of RM0.345 in March, BSTEAD’s share price has plotted higher highs and higher lows to
reach a peak of RM0.825 in July before entering a consolidation mode thereafter.
• On the chart, the stock has rebounded from the lower trendline recently to end at RM0.665 yesterday,
suggesting that a probable continuation of the upward momentum.
• This is supported by the current share price that is still trending above its 50-day simple moving average.
• Riding on the ascending price channel, BSTEAD shares could climb towards our resistance thresholds
of RM0.76 (R1) and RM0.85 (R2), which represents upside potentials of 14% and 28%, respectively.
• Our stop loss level is pegged at RM0.59 (or 11% downside risk). Our stop loss level is set at RM0.49 (8%
downside risk from yesterday’s closing price of RM0.535).
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recommendation contained in this document does not have regard to the specific investment objectives,
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Published:

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