Boustead expands Sabah’s plantation acreage with RM750m buy

By DASHVEENJIT KAUR / Pic By TMRpic

Boustead Plantations Bhd (BPB) is buying 42 parcels of plantation land measuring 11,600ha in Labuk and Sugut, Sabah, from Pertama Land & Development Sdn Bhd for RM750 million cash.

The land will complement its existing operations in Sabah.

“We are excited about the potential value that this size-able land acquisition will bring to the group, as part of our ongoing strategy to strengthen our earnings potential and enhance our prospects,” its vice chairman Tan Sri Lodin Wok Kamaruddin noted in a release yesterday.

The deal will be financed by the RM928 million raised from its initial public offering (IPO) on June 26, 2014.

Some RM420 million of that money will be used for this deal, the company announced.

To date, BPB has utilised RM63.8 million of the IPO proceeds to acquire beneficial interests in plantation land in Sugut, Sabah. The balance RM356.2 million will go towards part or full repayment of bank borrowings for past acquisitions of plantation land.

BPB recorded a 73% year- on-year (YoY) fall in its net profit of RM22.7 million, or earnings per share of 1.42 sen for the second-quarter ended

June 30, 2017 (2Q17), due to absence of gains on disposal of plantation land included in 2Q16 of RM89.6 million.

Its revenue eased marginally to RM169.48 million from RM174.92 million a year ago.

For the six months, BPB recorded a net profit of RM66.4 million or 4.15 sen a share, and revenue of RM358.5 million versus a net profit of RM140 million on RM311.9 million revenue for the same period in 2016.

The lower figure for the quarter YoY came despite average crude palm oil (CPO) selling price for first-half (1H) of the year averaging RM2,969 per metric tonne (MT), a 22% hike from the same period last year.

“Fresh fruit bunches (FFB) production increased by 10% to 440,075MT, mainly as a result of improved yields as crops recovered from the effects of El Nino. Average oil extraction rate for the 1H was 20.8%, while average kernel extraction rate was 4.3%, a slight decline from last year,” BPB noted in its release yesterday.

BPB declared a second interim dividend of three sen per share for the financial year ending Dec 31, 2017, payable on Sept 19, 2017.

“For the 1H, we achieved solid growth in our operating profit due to improved FFB production and favourable CPO prices.

“This was further supported by lower CPO inventory and increased palm oil demand during the Ramadhan and Hari Raya festival,” he added.

Moving forward, he anticipates a challenging 2H due to slower demand from traditional markets, higher CPO production and reduction in biodiesel production in Indonesia.

“CPO prices could be influenced by lower yields of soybean production in the US. While we expect FFB yields to improve in our peninsula and Sabah regions, ongoing labour shortages coupled with difficult ground conditions in Sarawak may continue to have an impact,” he added.