Analysts neutral as TSH eyes secondary listing in Singapore


Analysts noted that the current proposal is just for a secondary listing and quotation on the Main Board of the SGX. — Photo from TSH Resources Bhd

KUCHING (July 24): Sabah-based planter TSH Resources Bhd (TSH) has announced its intentions to undertake a secondary listing on the Main Board of the SGX-ST.

Nevertheless, Bursa Securities will remain as its primary stock exchange.

Analysts noted that the current proposal is just for a secondary listing and quotation on the Main Board of the SGX. No new shares will be issued and no funds will be raised.

The reasons given by TSH are to widen its existing shareholding base; provide additional funding avenue if need be; and greater regional/international visibility.

The team with AmInvestment Bank Bhd (AmInvestment Bank) was neutral on this secondary listing as plantation companies in Singapore trade at lower price earnings (PE) multiples compared to their Malaysian counterparts.

“According to Bloomberg, planters in Singapore are currently trading at FY24 PEs of seven to nine times. In comparison, TSH’s FY24 PE is 14,” AmInvestment Bank calculated.

“First Resources and Bumitama Agri’s FY24 PEs are eight times each. Wilmar International, which is one of the largest agri-companies in Asia, is presently trading at a FY24F PE of nine times.

“We thus maintain hold on TSH Resources with a fair value of RM1.05 per share. Our fair value is based on a FY24 PE of 15 times, which is the 5-year mean for small planters.”

Sharing a neutral view is Public Investment Bank Bhd’s team (PublicInvest Research) which noted that the targeting secondary listing is by the third quarter of 2023 (3Q23).

“The proposed secondary listing is not subject to the approval of the shareholders of TSH. However, it is conditional upon the proposed amendments, which is subject to its shareholders’ approval.

“We make no changes to our earnings forecasts as there is no financial impact on the group’s financials. We maintain out neutral call with an unchanged target price of RM1.10 based on 13 times FY24 earnings per share.”

As of June 2023, Kenanga Investment Bank Bhd’s research arm (Kenanga Research) saw that there are 640 listed companies with a market cap of nearly RM2 trillion in the SGX.

“Foreign companies made up about a third of all the listed companies and its market cap. Currently, there are seven palm oil-related groups listed in the SGX, from S$25 billion market cap giant Wilmar to Golden Agri-Resources (S$3 billion), Bumitama (S$1 billion) and downstream specialist Mewah International (less than S$1 billion),” it said.

“Unlike Bursa Malaysia, there is no separate plantation sector in the SGX, plantation companies are instead grouped under Food & Beverage with the likes of Thai Beverage, F&N and Del Monte Pacific.”

Thus, Kenanga Research said TSH was unusual among Bursa-listed plantation entities as the bulk of its earnings are already from Indonesia and much of its future organic expansion will be as well.

“Understandably, the group wants fund flexibility beyond ringgit-centric avenues,” it continued.

“Equally important, it could also ease any pending acquisition/disposal with Indonesian parties as many are quite at home with the SGX and Singapore. At the same time, keeping its primary listing with Bursa is sensible as Malaysia is still home to some of the world’s leading plantation groups.”