KUALA LUMPUR (Sept 22): Kenanga Research said Boustead Holdings Bhd, as a conglomerate, appears undervalued on a sum-of-parts basis.

In its daily technical highlights today, the research house said the aggregate of its share of market capitalisation in the listed subsidiaries and associate – namely Pharmaniaga Bhd (56% stake), Boustead Plantations Bhd (57% stake), Boustead Heavy Industries Corp Bhd (65% stake) and Affin Bank Bhd (21% stake) – works out to be RM2.03 billion currently, which surpasses the existing market cap of Boustead Holdings of RM1.35 billion.

It said this has yet to take into consideration the valuations of its unlisted property assets (including valuable land bank).

The research house said Boustead Holdings is also an indirect proxy to the Covid-19 vaccine thematic play and rising crude palm oil 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 Lembaga Tabung Angkatan Tentera (which holds a 59.4% stake) could be deciding on whether to proceed with the preliminary proposal to take Boustead Holdings private – at an indicative price of 80 sen per share – by Oct 27.

“From a trough of 34.5 sen in March, Boustead Holdings’ share price has plotted higher highs and higher lows to reach a peak of 82.5 sen in July before entering a consolidation mode thereafter.
“On the chart, the stock has bounced up from the lower trendline recently to end at 66.5 sen yesterday, suggesting that a probable continuation of the upward momentum could be on the cards,” it said.

Kenanga Research said 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, Boustead Holdings shares could climb towards our resistance thresholds of 76 sen (R1) and 85 sen (R2), which represents upside potentials of 14% and 28%, respectively.

“Our stop loss level is pegged at 59 sen (or 11% downside risk),” it said.