KUALA LUMPUR: Boustead Plantations Bhd is looking to acquire 20,000ha of land in the Asean region within the next three to five years, said vice chairman Tan Sri Lodin Wok Kamaruddin after the firm’s listing ceremony at Bursa Malaysia yesterday.
“Presently we are not aiming anywhere in specific. We are not in a hurry to spend the money we obtained from our listing. [Wherever there is opportunity], we will consider the offer whether it is in Malaysia or neighbouring countries,” Lodin said.
The plantation arm of conglomerate Boustead Holdings Bhd, Boustead Plantations presently owns about 71,000ha of plantation area spanning Peninsular Malaysia and Sabah and Sarawak. It has raised a total of RM1.05 billion from its initial public offering (IPO), with a bulk of the proceeds going back to the group.
Yesterday, the firm’s share price opened at RM1.66 at its debut on the Main Market of Bursa. This was a 3.8% increase from its IPO price of RM1.60. It finished the day at RM1.63, with a market capitalisation of RM2.62 billion.
“As we move forward, we are implementing a three-pronged strategy to enhance our yields and subsequently maximize our profitability for the long-term,” Lodin said of the firm’s outlook.
According to him, these strategies will not only see the acquisition of landbank but include making improvements in its best practices and utilising new planting materials to increase operating efficiency.
“We are more concerned with improving the agronomic practices at our estates by replacing manual workers with mechanised instruments. We believe the production and yields from our plantations will improve greatly with efficiency,” said Lodin, adding that the use of better quality oil palm seeds could also boost fresh fruit bunch production.
For the first quarter ended March 31, 2014, Boustead Plantations saw its net profit rise 36.2% to RM30.1 million, on revenue of RM198.6 million. In terms of efficiency, the group’s oil extraction rate (OER) stands above 21%, which is slightly higher than the current national OER of 20.5%.
Lodin is positive on the outlook for crude palm oil (CPO) price for the second half of this year towards 2015 driven by the El Nino phenomenon that is set to affect production.
“We foresee our production and yield decreasing due to El Nino, therefore, the price of CPO is expected to improve to about RM2,700 to RM2,800 per tonne,” he added.
This article first appeared in The Edge Financial Daily, on June 27, 2014.