Boustead Plantations to hive off ‘non-performing’ assets
The Star Online (13/04/2018) - PETALING JAYA: Boustead Plantations Bhd image: https://cdn.thestar.com.my/Themes/img/chart.png is looking to sell more of its land as it seeks to hive off “non performing assets.”
The company’s vice-chairman Tan Sri Lodin Wok Kamaruddin said whether more land deals would materialise in its FY18 ending Dec 31 would depend on whether they can secure buyers for the lands.
“We want to make sure that those (assets) that are not contributing well to the group would be sold or closed down. Those which are not really giving good returns to shareholders: we will need to find someway to monetise it and unlock the value. In some cases to make it more cost efficient,” Lodin said.
Asked if this implied that the company would be monetising more assets down the road, Lodin replied: “for the right reasons (yes) and the right asset. Whether it would be this year, it depends: if another party gives us a price we cannot refuse then why not?”
“They are all assets which are ready for conversion for property development: but we may not want to do it ourselves like in the case of the Seberang Prai land, we may just want to sell it to whoever is interested in it. To take the cash and do something else with it,” he said.
“We have quite a substantial amount of landbank but we would like to be a little bit more selective for developing these plantation lands for its potential for property development.
“Our focus at the present moment is to develop our land in the Klang Valley and Johor,” Lodin added.
He said that the company has already started developing a small tract of its land in Semenyih that is near the university.
Boustead Plantations netted a record net profit in the last financial year largely due to a one time gain of RM527.3mil from selling 677.78ha of freehold land in North Seberang Prai to SP Setia Bhdimage: https://cdn.thestar.com.my/Themes/img/chart.png for RM620.1mil in cash.
“We are looking at developing a way to ensure sustainability of our revenue and profit. It’s not just selling land but more on monetising our assets,” he said.
On its outlook for the FY18, Lodin said he was anticipating a “good year”.
In its FY17, Boustead Plantations delivered a 192.04% jump in net profit to RM665.24mil on the back of a 7.38% increase in revenue to RM760.1mil mainly due to gains realised from the disposal of its Seberang Perai, Penang land.
Moving forward, Lodin said the company would like to continue reducing its dependence on human labour to introduce various technologies in the operations and maintenance of its estates.
“We would like to introduce new breeds of planting material to ensure that our plantations can generate a higher production to give better yields and to improve the efficiency and cost effectiveness of our operations: to bring down our cost of production especially in areas such as Sabah and Sarawak,” he said.
Commenting on the acquisition of a 11,600 ha of plantation land in Sugut, Sabah for RM750mil, Lodin said the company was confident of increasing its net yield from the estate with a capital expenditure of RM250mil over 10 years.
“We own other estates around it as well so there will be economies of scale from this acquisition.
“At the moment the Sugut land is only doing about 10-11 tonness per ha of fresh fruit bunch yield and we can increase this to 17 tons per ha,” Lodin said.
“Another reason why we decided to acquire this land is that it was done at a time when we sold our land in Penang which was generating a revenue of only RM7.4mil for us.
“So with the same amount of money we are buying this Sugut land and we are confident of generating at least RM55mil in revenue from this land,” he added.