MARKET DEVELOPMENT
TSH to Play Waiting Game with More Oil Palm Maturing
TSH to Play Waiting Game with More Oil Palm Maturing
08/11/2013 (Borneo Post) - TSH Resources Bhd (TSH) foresees a significant improvement in earnings as more of its oil palm areas come into maturity.
According to the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research), as at end-June 2013, about 30 per cent of its planted areas consist of oil palm trees ranging between four to seven years old.
This signifies higher growth in the coming years as fresh fruit bunch (FFB) production per hectare is picking up from the trees currently within this range.
TSH’s long-term strategy is to maintain focus as an upstream player and is committed to increase its production.
“As at June 30, 2013, almost 60 per cent of the TSH total landbank is still unplanted. The company indicates that they will plant about 3,000ha per year in order to increase FFB production.
“Based on historical production numbers, TSH had doubled their production from 198,191 metric tonnes (mt) of FFB in 2008 to 399,600mt in 2011.
“With an average growth of about 30 per cent per annum (2008-2012), TSH expects its FFB production in 2013 to increase to 536,900mt, which is about 16 per cent of Felda Global Ventures Bhd production currently,” noted the research house.
MIDF Research also highlighted that less than 60 per cent of TSH’s planted land is in Kalimantan. This land has yielded well as it is virgin land.
This has contributed to higher oil extraction rate (OER) compared to other players as the quality of the fruit in terms of oil content, is higher. TSH operation in Kalimantan recorded an OER of 24 per cent, higher against Sabah standard of 21 per cent to 22 per cent and Peninsular Malaysia, which is about 18 per cent to 20 per cent.
TSH’s Wakuba ramet, which is derived from oil palm tissue culture, is expected to help TSH to maintain its commendable production growth over the longterm.
The ramets help to increase the oil yield per hectare up to 10mt, doubling the current national average of about 4.5mt per hectare. TSH has started planting oil palm with the Wakuba ramets since the middle of 2012 with results to be seen from 2016 onwards.
“In July and September this year, TSH had completed two series of private placement of 20.86 million shares each. The exercises allow TSH to expand its businesses without incurring more debt and help improve its gearing level.
“After the private placement exercises, TSH gearing level is estimated to have improved to 0.61 times from 1.04 times as at,” the research house commented.
According to the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research), as at end-June 2013, about 30 per cent of its planted areas consist of oil palm trees ranging between four to seven years old.
This signifies higher growth in the coming years as fresh fruit bunch (FFB) production per hectare is picking up from the trees currently within this range.
TSH’s long-term strategy is to maintain focus as an upstream player and is committed to increase its production.
“As at June 30, 2013, almost 60 per cent of the TSH total landbank is still unplanted. The company indicates that they will plant about 3,000ha per year in order to increase FFB production.
“Based on historical production numbers, TSH had doubled their production from 198,191 metric tonnes (mt) of FFB in 2008 to 399,600mt in 2011.
“With an average growth of about 30 per cent per annum (2008-2012), TSH expects its FFB production in 2013 to increase to 536,900mt, which is about 16 per cent of Felda Global Ventures Bhd production currently,” noted the research house.
MIDF Research also highlighted that less than 60 per cent of TSH’s planted land is in Kalimantan. This land has yielded well as it is virgin land.
This has contributed to higher oil extraction rate (OER) compared to other players as the quality of the fruit in terms of oil content, is higher. TSH operation in Kalimantan recorded an OER of 24 per cent, higher against Sabah standard of 21 per cent to 22 per cent and Peninsular Malaysia, which is about 18 per cent to 20 per cent.
TSH’s Wakuba ramet, which is derived from oil palm tissue culture, is expected to help TSH to maintain its commendable production growth over the longterm.
The ramets help to increase the oil yield per hectare up to 10mt, doubling the current national average of about 4.5mt per hectare. TSH has started planting oil palm with the Wakuba ramets since the middle of 2012 with results to be seen from 2016 onwards.
“In July and September this year, TSH had completed two series of private placement of 20.86 million shares each. The exercises allow TSH to expand its businesses without incurring more debt and help improve its gearing level.
“After the private placement exercises, TSH gearing level is estimated to have improved to 0.61 times from 1.04 times as at,” the research house commented.