Golden Agro scheme ahead of planting schedule

by **Cals** Tue 20 Aug 2013, 11:53

Golden Agro scheme ahead of planting schedule
Business & Markets 2013
Written by Janice Melissa Thean of theedgemalaysia.com
Tuesday, 20 August 2013 11:45

KUALA LUMPUR: The Golden Agro Growers Scheme (GAGS), managed by Golden Agro PLANTATION [] (Mukah) Bhd, is ahead of its planting schedule.

"By 2015, the entire scheme of 10,443 acres (4,226ha) will be fully planted. The way we are planting it may even be a bit earlier," said the scheme's promoter Datuk Allan Lim Kim Huat, the former executive deputy chairman of SUNRISE BHD [].

He told a media briefing yesterday that as at last week, 2,600 acres have been planted, making up 24.9% of the entire plantation. Six months ago, only 10% to 15% had been cleared and planted.

A further 1,214 acres (11.6%) are ready for planting, while another 1,338 acres (12.8%) have been cleared but are not ready for planting. About 5,291 acres (50.7%) are presently undeveloped.

GAGS has 12,587 acres of oil palm plantation land in Mukah, Sarawak. However, only 10,443 acres are cultivable. GAGS' quarter-acre plots sell for RM8,000 per plot, with a maturity of 20 years.

Lim said Golden Agro will keep about 30% of the land, leaving 29,240 plots for sale. At a price of RM8,000 per plot, this could raise RM233.9 million for the company, which it will use to meet its cash flow needs in developing the land.

Development costs, including infrastructure works, will come to about RM18,000 per ha. Golden Agro intends to raise the price of the plots eventually, but no specific targets have been set.

According to Lim YangLi, Golden Agro business development executive, traditionally some growers schemes raise the price after 20% of the total plots have been sold.

Presently, Golden Agro's take-up rate is "negligible" at less than 5%, as they have not been aggressively marketing the scheme since it was launched in January this year.

The scheme guarantees 35% returns for the first five years, and subsequently 100% of net profit until maturity. The company made its first dividend payout in May at 3.5%, pro-rated for a twice-yearly distribution.

Golden Agro has a buy-back scheme, whereby it can repurchase up to 10% of the plots at 85% of the cost from the seventh year onwards.

The company believes that the scheme remains an attractive option for investors despite the weak prevailing crude palm oil (CPO) price. Spot price at yesterday's closing stood at about RM2,395 per tonne.

"CPO prices should have recovered and strengthened by the time the company reaches the harvesting phase at the end of 2017," said Lim.