18/4/06  PETALING JAYA (The Star)  -   Agro-based Kumpulan Fima Bhd (KFima) group is fortunate that it was selected by the Malaysian Palm Oil Board (MPOB) as one of three companies that it will jointly build palm oil-based biodiesel plants with. 

The KFima/MPOB plant is scheduled to be commissioned in February next year. 

The current US stock market theme on biofuel stocks aside, there are currently heightened expectations that biofuel plants will be profitable businesses. With crude oil prices likely to remain high, although not necessarily as high as current levels, KFima's biofuel project looks promising. 

In the tie-up with MPOB, announced last December, MPOB will construct a palm biodiesel plant with a capacity of 60,000 tonnes a year. KFima will lease this plant for RM1.15mil a year from MPOB. 

This represents an opportunity for KFima of a low-cost entry into this industry as it will lease the biodiesel plant from MPOB. 

However, this will be the first time for KFima to operate a biodiesel plant. Even so, its managing director Ahmad Riza Basir had said the project was synergistic with other businesses in the group which is also engaged in managing tank farms or bulking, storing of feed materials and oil blending activities. 

Equally important, KFima has proven in recent years that it is able to execute the operations of all its divisions profitably. 

The group's biggest division is public-listed subsidiary Fima Corp Bhd, which contributed a pre-tax profit of RM30.7mil to the KFima group for the nine months to Dec 31, 2005. 

The other divisions are bulking with a contribution of RM7.4mil during the same period, trading (RM3.1mil), agro-based (RM2.5mil), others (RM9.4mil) and associated companies (RM3.9mil). 

In addition, the group is diversifying into plantations in Indonesia. It can afford to do so as it held gross cash of over RM60mil at the end of last year, after having made divestments of several assets. 

The group has made a full recovery from a financial crisis which caused its shareholders' funds to drop to negative RM15mil in 2002. 

“It was in ICU (intensive care unit) at that time, but it's out of the woods now,” a group executive had said. 

The group has a market capitalisation of RM139mil on its share price of 53 sen yesterday, and valued at a forward price/earnings ratio (PE) of 5.3 times, according to Bloomberg. 

Going by its recent track record, KFima is expected to get even healthier from here on. Company officials could not be reached for comment.