MARKET DEVELOPMENT
Chin Teck Eyes 10-15% Profit Growth
Chin Teck Eyes 10-15% Profit Growth
27/01/2014 (The Sun Daily) - Local palm oil planter Chin Teck Plantations Bhd, which saw its net profit dive by more than 50% in the previous financial year, now expects a 10-15% recovery in bottom line in the current financial year ending Aug 31, 2014 (FY14), said its executive director Goh Wei Lei.
"We are slightly optimistic about Chin Teck's performance in FY14, as we do not expect the crude palm oil (CPO) price to go down further, while the losses of our operation in Indonesia will start to taper down," Goh told the reporters after the group's AGM here last Friday.
Chin Teck's net profit has halved by 52.7% to RM24.91 million in FY13, from RM52.68 million a year ago. Its revenue also declined by 14% to RM102.51 million, mainly dragged down by its Indonesia operation the as well as the decreases in the average selling price of CPO.
The group's CPO selling price has gone down by 21% to RM2,489 per tonne in FY13, compare to RM3152 per tonne a year ago.
Given the CPO price in the past two years "remained relatively low", Goh opined the current price level is still at the lower band and there is an upside on it.
On another note, Goh said Chin Teck's losses in the Indonesia operation should reduce in FY14, as he expects part of the harvesting activities will be resuming in the upcoming months.
The group's plantation estate at Lampung Province encountered a suspension in routine harvesting due to unrest in the surrounding villages located in the vicinity of the plantations, while the harvesting of young mature palms at South Sumatera Province has also been delayed.
"The social unrest is still going on. We are still working closely with the local government and the law enforcer to solve this issue, hopefully we will be able to resume harvesting soon," he said.
Through joint ventures, the group engaged in oil palm plantations in Indonesia, with a total planted area of 21,224 hectares.
Despite suffered an overall loss of RM10.3 million from its share of the results of the JV in FY13, Chin Teck however has no plan to exit Indonesia, Goh said, adding that "disposal is not an option for us".
"We have no consideration at this point in time. We still believe that this is a good investment. If we clear all these temporary problems, this will contribute a lot to us in the time to come," he said.
Goh added that Chin Teck needs at least another one to two years to "fully bring Indonesia operation back to good".
Chin Teck currently has cash and bank balances of RM223.55 million and it does not have any borrowings to maintain a debt free capital structure.
Goh said the group has no immediate plan to raise capital, unless the opportunities to expand its plantation land arise.
In Malaysia, Chin Teck currently has three estates at Jemima and Sungei Sendayan Estate, Gua Musang Estate and Keratong Estate with a total planted area of 10,925 hectares, but have no plan to acquire more land to cultivate oil palms for the time being.
"The suitable plantation land doesn't just come by every other day. We always want to reserve some cash, in case if we found a plot that is very suitable to us," he said.
Chin Teck's share price closed up 5 sen or 0.53% at RM9.55 last Friday.
"We are slightly optimistic about Chin Teck's performance in FY14, as we do not expect the crude palm oil (CPO) price to go down further, while the losses of our operation in Indonesia will start to taper down," Goh told the reporters after the group's AGM here last Friday.
Chin Teck's net profit has halved by 52.7% to RM24.91 million in FY13, from RM52.68 million a year ago. Its revenue also declined by 14% to RM102.51 million, mainly dragged down by its Indonesia operation the as well as the decreases in the average selling price of CPO.
The group's CPO selling price has gone down by 21% to RM2,489 per tonne in FY13, compare to RM3152 per tonne a year ago.
Given the CPO price in the past two years "remained relatively low", Goh opined the current price level is still at the lower band and there is an upside on it.
On another note, Goh said Chin Teck's losses in the Indonesia operation should reduce in FY14, as he expects part of the harvesting activities will be resuming in the upcoming months.
The group's plantation estate at Lampung Province encountered a suspension in routine harvesting due to unrest in the surrounding villages located in the vicinity of the plantations, while the harvesting of young mature palms at South Sumatera Province has also been delayed.
"The social unrest is still going on. We are still working closely with the local government and the law enforcer to solve this issue, hopefully we will be able to resume harvesting soon," he said.
Through joint ventures, the group engaged in oil palm plantations in Indonesia, with a total planted area of 21,224 hectares.
Despite suffered an overall loss of RM10.3 million from its share of the results of the JV in FY13, Chin Teck however has no plan to exit Indonesia, Goh said, adding that "disposal is not an option for us".
"We have no consideration at this point in time. We still believe that this is a good investment. If we clear all these temporary problems, this will contribute a lot to us in the time to come," he said.
Goh added that Chin Teck needs at least another one to two years to "fully bring Indonesia operation back to good".
Chin Teck currently has cash and bank balances of RM223.55 million and it does not have any borrowings to maintain a debt free capital structure.
Goh said the group has no immediate plan to raise capital, unless the opportunities to expand its plantation land arise.
In Malaysia, Chin Teck currently has three estates at Jemima and Sungei Sendayan Estate, Gua Musang Estate and Keratong Estate with a total planted area of 10,925 hectares, but have no plan to acquire more land to cultivate oil palms for the time being.
"The suitable plantation land doesn't just come by every other day. We always want to reserve some cash, in case if we found a plot that is very suitable to us," he said.
Chin Teck's share price closed up 5 sen or 0.53% at RM9.55 last Friday.