Boustead Plantations listing by Q1 2014

Posted on 6 December 2013 - 05:40am

Eva Yeong
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PETALING JAYA (Dec 6, 2013): Boustead Holdings Bhd, which aims to list its plantation division by the first quarter of next year, is expanding its plantation land by 20% to 100,000ha from 83,000ha over the next two years, said its deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin.
Yesterday, its shareholders approved the privatisation of Al-Hadharah Boustead REIT, which will pave the way for the group to consolidate all its plantation assets into one entity, with plans to list its plantation division via an enlarged Boustead Plantations Bhd on Bursa Malaysia.
"Now that we have the approval of shareholders for Boustead Holdings to take the REIT private and this will be merged with our Boustead plantation division. We hope to make a submission to the Securities Commission by year-end to get Boustead Plantations listed on Bursa Malaysia," he told reporters after the group's EGM yesterday.
Lodin said the process will take about three to four months and expects to list its plantation division by the first quarter of next year.
"With the proposed listing, the total oil palm plantation landbank (after merging the estates and disposal of plantation in Indonesia) of Boustead Plantations will increase to 83,000ha, which will potentially produce over 1.2 million tonnes of fresh fruit bunches," he said.
"If compared with some of the other players in the market, this (83,000ha) is considered as quite a reasonable size, but still we would like to acquire more estates. The initial target would be 100,000ha hopefully within two years or so," he added.
The group intends to focus on Malaysia and is looking at land in Sabah and Sarawak for its expansion. Boustead Plantations currently has 10 mills and there are no plans to go further downstream.
Post-listing, Lodin said the group aims to have its plantation division, which will be among the top five in terms of estate size, contribute 25% to the group's total profit.
"Last year, its contribution was very high at about 30%. This (contribution) depends on the price of crude palm oil (CPO). But this year, unfortunately, its contribution has been quite low because the price of CPO came down. It was about 12% this year so far," he said.
Lodin expects CPO prices to improve to the range of RM2,600 to RM2,800 per tonne next year.
"Early this year was bad, it was at the level of about 2.67 million tonnes of stock and then there was expectation that it would come down to about 1.7 million tonnes or 1.8 million tonnes, which it did about three to four months back. Now the level is close to 2 million tonnes. At that level, CPO price can be expected to hover around RM2,500 to RM2,700 per tonne," said Lodin.
He said it expects a downtrend in production over the next six months as the festive season will see more purchases from China, India and Pakistan while Indonesia's usage of palm oil for biodiesel would absorb some of the stock in the market.
Lodin said it is also wants to expand further into providing services to the oil and gas (O&G) sector.
"Initially just to be a provider of equipment and services for the O&G sector but we are also interested to look at expanding into the operation of O&G field itself. Even though this is very preliminary, this is an area we feel has got tremendous potential and we are building up our expertise and know-how, and identifying the right partners to go into this O&G business," he said.
He said it is looking at forming joint ventures with foreign companies or employing experts involved in the supply of systems and equipment to the O&G sector.
On property development, the group is jointly developing a shopping mall with Ikea at Jalan Cochrane, Kuala Lumpur. Besides the shopping mall, the project will include Ikea's second outlet, condominium, hotel and office towers with a total gross development value of RM2 billion.
On other divestments, Lodin said it is looking at closing down Boustead Emastulin Sdn Bhd and is reviewing its investment in the shipping agency business which includes freight forwarding and air freight.