Brahim’s in talks to dispose of sugar venture

by **Cals** Sat 21 Jun 2014, 03:50

Business & Markets 2014

Written by Adrian Wong of theedgemalaysia.com

Friday, 20 June 2014 09:27

KUALA LUMPUR: Brahim’s Holdings Bhd is in talks with several parties to take over its sugar venture, said executive chairman Datuk Ibrahim Ahmad Badawi.
Through 60%-owned subsidiary Admuda Sdn Bhd, the group holds the licence to produce sugar for Sabah and Sarawak, and had actually configured plans to complete a RM150 million sugar refinery plant in the Demak Laut Industrial Park in Sarawak by 2015.
However, as more licences have recently been given out to beverages players to import sugar directly, resulting in them buying less from local refiners, Brahim’s management realised that its refinery plant project may become less feasible.
It was reported that in the first five months of 2014, the number of beverage companies allowed to import sugar grew to 16 and they together brought in 150,000 tonnes, doubling the amount imported by 13 beverage players in the whole of last year.
The influx of imports has hurt local refiners like MSM Holdings Bhd — a subsidiary of Felda Global Ventures Holdings Bhd — and Central Sugars Refinery Sdn Bhd, a subsidiary of Tradewinds Malaysia Bhd.
“Too many licences have been given out to companies to import sugar,” said Ibrahim. “More and more people are coming into the sugar business and that upsets the market.”
“We have got some offers [for its sugar venture], and some people are currently discussing with us. But we have not made any firm decisions for the moment.”
Meanwhile, on the in-flight catering front, Ibrahim does not expect any significant impact to its earnings arising from MAS’ potential cost-restructuring exercise.
Since flight MH370’s disappearance on March 8, Brahim’s shares have plummeted by 37.5% from RM2.56 to RM1.60 as at June 9, but the shares have recovered since amid market talk of reviving the beleaguered national carrier.
“We have 36 other foreign carriers. So basically as long as KLIA operates, and as long as Penang’s airport operates, we’ll be there …unless they close KLIA, which is not likely to happen,” he said.
He added that in the event that MAS loses 20% to 30% of its passengers, other passengers are still the customers of Brahim’s.
Asked about market talk that MAS plans to renegotiate Brahim’s 25-year catering contract to reduce cost, Ibrahim said: “There was some indication earlier, but what our operational guys are looking at now is actually to see how we can help MAS work together and try to maybe simplify the meals so as to reduce costs and so on.”
Brahim’s shares closed at RM2.02 yesterday, up one sen from its last close at RM2.01. The group has a market capitalisation of RM482 million.

This article first appeared in The Edge Financial Daily, on June 20, 2014.