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Earlier this year, Boustead is going through a series of restructuring which involved in disposal of none core asset and during April 2021, the group had inked a MOU with NEXT GENERATION OIL SDN BHD for the development of 400 acre land involving ALGAE BIOFUEL.
The MOU will have a 1 year duration to be executed.
Accordingly, Boustead had been disposing asset in order to raise fund for the new venture, and to pare down corporate debts amounting to more than RM 7 billion.
Notable disposal involving
1. Royale chulan hotel
2. Boustead Cruise Centre
3. Disposal of 2 piece of land at Jalan Cochrane to Sunway group
4. Disposal of listed shares in Pharmaniaga (approx 5%)
5. Disposal of land to YTL by Boustead Plantation
6. Disposal of University of Nottingham, Malaysia
More disposal on the move?
There is also rumor of disposal of shopping complex THE CURVE at Mutiara Damansara which had a carrying value of more than RM 500 million.
Season investor will look at this corporate action as a seriousness of Boustead in going into the new venture of ALGAE BIOFUEL.
At the mean time, the current share price of Boustead is sitting at a very low point with NTA worth RM 1.54 per share.
HOW GOOD IS THE NEW VENTURE INTO ALGAE BIOFUEL ?
According to research, Malaysia tropical weather is most suitable for ALGAE BIOFUEL development.
Comparing different agricultural feed stock into refining biofuel, the outcome of ALGAE had far surpassed other agriculture feedstock in terms of yield.
Full reference on the study can be referred here
As per research, the oil yield (kg/ha/year) is 1500% better than using palm oil to convert into biodiesel.
Boustead group will be the first in Malaysia to pioneer into this venture.
As of now, Bstead will be an interesting company to be invested in at the current price given that it is at the lowest region in the 5 years. While the profit will not come into the effect so fast, it will need at least another 1 to 2 years to see positive contribution, and the group estimate to see biofuel of 500000 barrel a day from algae biofuel by year 2025.
Long term investor looking to invest at least 2 to 3 years can give a further study on Boustead. At the current price below 60 cents, Bstead is very attractive given the future potential of the new venture.
IMPORTANT NOTICE
Please be informed, I am not a professional or certified analyst. I am not a licensed consultant, just a normal retail investor. I am just sharing my ideas and opinion on the market outlook. Any company mentioned should not be interpreted as a buy/sell/trade call. Please do your own research and buy/sell/trade at your own risk.
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