ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

In Equity Sales and Research for more than 25 years covering Asian markets. Possesses in-depth knowledge of a wide range of companies, economies, and markets in Asia. Over his career, he has specialised in HK/China and ASEAN markets at various different Investment Banks, most recently heading equities in Indonesia for Bank of America Merrill Lynch in Jakarta for more than three years. Whilst in Jakarta, he produced a well-read daily and weekly product on the Indonesian market, which included company visits, as well as political, economic and sector commentary. A former racing skier, who enjoys ultra-marathons and surfing in his spare time.

ASEAN Insight Provider

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Equity Bottom-Up

Eagle High Plantations Tbk PT / Equity Bottom-Up

A foray through Jakarta "macet" to meet with <a href="https://www.smartkarma.com/entities/4421" target="_blank" data-smartkarma-citation="entities:4421:1">Eagle High Plantations Tbk P (BWPT IJ)</a> management for lunch in the traffic blackspot of Mega Kuningan, was a worthwhile adventure, revealing a company on the cusp of a new growth phase, after a period of M&amp;A indigestion. Eagle High is the result of a merger between BW Plantations and Rajawali Group's palm oil (CPO) plantations. It has been fraught with concerns over corporate governance and asset quality.  <a href="https://www.smartkarma.com/entities/2200" target="_blank" data-smartkarma-citation="entities:2200:1">Felda Global Ventures (FGV MK)</a> of Malaysia has also been put forward as a potential suitor but has stayed in the wings, possibly waiting for Rajawali to be a forced seller (though interestingly Rajawali Group has been a buyer of late). From an operational point of view, the combined entity is back on an even keel, with production about to hit record highs. 1Q16 was hit by unusual weather conditions but production doubled over the last three months, as a large portion of its plantations (85%-90%) have just hit the start of the production sweet spot (7 years average age).  2016 will also mark the end of the investment phase for the company. It should turn FCF positive in 4Q16 and debt can start to be paid down. There is now room for the company to focus on improving operational efficiencies. Global production of palm oil is forecast top grow +0%-3% this year, with demand growth at +4%. This should be supportive for CPO pricing. Before the merger with Rajawali's plantations, BW Plantations was 70% owned by foreign institutions, it now has very few institutional shareholders and is not covered by any major brokers. Given that the company is on the verge of multi-year productions breakout, it must be worth examining as a recovery story. Currently, the stock is trading at &lt;1x PBV , with a long-term normalized ROE of 16-17%.

A foray through Jakarta "macet" to meet with Eagle High Plantations Tbk P (BWPT IJ) management for lunch in the traffic blackspot of Mega Kuningan, was a worthwhile adventure, revealing a company on the cusp of a new growth phase, after a period of M&amp;A indigestion. Eagle High is the result of a merger between BW Plantations and Rajawali Group's palm oil (CPO) plantations. It has been fraught with concerns over corporate governance and asset quality.  Felda Global Ventures (FGV MK) of Malaysia has also been put forward as a potential suitor but has stayed in the wings, possibly waiting for Rajawali to be a forced seller (though interestingly Rajawali Group has been a buyer of late). From an operational point of view, the combined entity is back on an even keel, with production about to hit record highs. 1Q16 was hit by unusual weather conditions but production doubled over the last three months, as a large portion of its plantations (85%-90%) have just hit the start of the production sweet spot (7 years average age).  2016 will also mark the end of the investment phase for the company. It should turn FCF positive in 4Q16 and debt can start to be paid down. There is now room for the company to focus on improving operational efficiencies. Global production of palm oil is forecast top grow +0%-3% this year, with demand growth at +4%. This should be supportive for CPO pricing. Before the merger with Rajawali's plantations, BW Plantations was 70% owned by foreign institutions, it now has very few institutional shareholders and is not covered by any major brokers. Given that the company is on the verge of multi-year productions breakout, it must be worth examining as a recovery story. Currently, the stock is trading at &lt;1x PBV , with a long-term normalized ROE of 16-17%.

Eagle High Plantations - Blind Spot - On the Ground in J -Town