13/2/06 (The Star)  -  TRADEWINDS Plantation Bhd, the youngest entrant to the elite class of listed plantation companies next month, is potentially a plantation giant in the making.

By 2010, the group aims to be among Malaysia's top five best-managed plantation companies in terms of performance, well supported by good yields, high returns and low costs.

Managing director Dr Radzuan Abdul Rahman told StarBiz in Kuala Lumpur that Tradewinds Plantation's game plan over the next four years would be to strengthen its upstream operations by unlocking the maximum value of its assets and tapping new opportunities when they arose.

He said three crucial factors - highest yield per hectare, highest oil extraction rate and lowest operational costs - would drive the group's aspiration to be among the top players in the industry.

“We are turbo-charging our efforts to ensure that the group will be able to deliver sterling results within the targeted time frame,” Radzuan said.

As a young plantation company, he said, the group would continue to have high capital expenditure, estimated at around RM100mil this year.

“This is not so much for acquiring land. Rather, much of it will be devoted to plantation development expenditure, infrastructure and housing for workers - all of which support our strategies to unlock the existing assets,” he added.

Tradewinds Plantation is the special purpose vehicle used in the merger between Johore Tenggara Oil Palms Bhd (JTOP) and Tradewinds Malaysia Bhd's plantation subsidiary. It will assume JTOP's listing status on the main board of Bursa Malaysia next month.

The merger would see Tradewinds Plantation's land bank growing to about 126,985ha initially (excluding its Indonesian operations), making it the fifth-largest listed plantation company in Malaysia in terms of planted hectarage.

“For now, our size is not an important issue,” Radzuan said, adding that the group's ultimate goal would be to offer investors consistent growth in yield per hectare, crop, revenue, earnings and dividends over the next few years.

Unlike many big players which are actively expanding in downstream operations, Tradewinds Plantation had an entirely different approach, he said, because as “a Johnny-come-lately company in this industry, we place the pursuit of optimum productivity and efficiency of upstream operations on the highest pedestal.”

“Our preoccupation will be on the group's planted hectarage, just short of 100,000ha where the average planted age is about seven years old,” he said, adding that this was the most responsive time for the group to “turbo-charge” their management for maximum crop yield and growth which, in turn, will translate into solid revenue growth.

Radzuan said Tradewinds Plantation expected its estates to yield an average of over 21 tonnes of fresh fruit bunches (FFB) per ha this year, a 17% improvement over last year. (The national average is 20 tonnes per ha.)

The “ideal” yield target would be 30 to 35 tonnes of FFB per ha, he said, adding that in the next few years, Tradewinds Plantation would work hard to unlock “its true maximum value” in the upstream operation.

The JTOP plantations are mostly in Johor, Kelantan and Terengganu (28,588ha), while Tradewinds’ estates are in Sabah, Sarawak, Johor, Kelantan and Terengganu (98,397ha).

Of the group's total land bank in Malaysia, 68% is in Sarawak and Sabah.

“We are quite dominant in Sarawak, being one of the pioneering companies which have successfully cultivated oil palms in the challenging peat soil environment versus the normal mineral soil in Peninsular Malaysia.”

He added that the experience in peat soil management over the last 15 years had created a niche for Tradewinds Plantation.

“We could be the referral point and, indeed, could commercialise our expertise in peat soil management to companies locally and abroad in the near future,” he added.

As for Indonesia, the group has 4,031ha of oil palm estates. While progress was being made on the operational front, Radzuan said Tradewinds Plantation, as a whole, was undergoing a full business transformation. 

Early this year, Tradewinds Plantation has instituted, among other things, cost monitoring control on the group's expenditure pattern and a key performance index online monitoring system for its oil palm estates.

On the group's selling policy for crude palm oil (CPO), he said the board of directors had given the green light to the management to use all the marketing instruments available to attain the best price for its products. 

“Last year, we managed to achieve an average CPO price of RM1,399 per tonne when the industry average was RM1,395,” he said.