Thursday, June 5, 2014

TSH (Planted Land Filled With Young & Immature Trees)

Sabah based TSH expects to complete the rm150 million acquisition of a 60% stake in Sg Kalabanak Estate Sdn Bhd in July 2014 which will increase its existing oil palm plantation area in Sabah by an additional 26794ha. Of the total land area of 26794ha, 2979ha has been planted, with 23851ha available for future planting.

When completed, the proposed acquisition will bring TSH’s unplanted landbank to some 82000ha and total landbank in both Indonesia and Malaysia to 132000ha.

The proposed acquisition comes with assumption of liabilities of not more than rm30 million from Ratus Awansari Sdn Bhd.

The deal is in line with TSH’s strategy to expand its landbank to ensure sustainability of its plantation business and comes just months after TSH’s purchase of Casa Logitstics Sdn Bhd in Oct 2013 which gives TSH access to 5084h of plantation land in Kalimantan Timur, Indonesia.

It is targeting continued sustained growth for the group of 20% per year for the next three years from 2014 in terms of FFB production.

The double digit growth target is possible as 82% of its planted land is filled with young and immature trees which was either coming into fruition or reaching their peak in two to three years from 2014.

TSH is planting 4000ha to 5000ha each year and will be kept busy for the next 10 years from 2014 with the vast unplanted land.

Further, new mills are being planned to be built on a biannual basis costing rm50 million.

TSH’s 2014 will be a better year than 2013 based on the group’s performance in the first quarter of ended March 31 2014 where its net profit and EPS more than doubled to rm52.17 million and 5.82 sen respectively from 1QFY2013.

Its cost of production in Sabah are like something like rm800 per tone to rm900 per tone. In Indonesia, the cost of production is rm1100 per tone but expects this to decline in the next few years from 2014 as the plantation grows.

The company is less susceptible to the changing CPO prices due to its level of efficiency.

It will reward shareholders by the group’s internal policy of paying out 20% to 30% of its profits as dividends.

Its officials did not rule out the possibility that the group will increase dividend payout as well as bonus issue as TSH’s profits increase.

Meanwhile TSH expects its Ekowood Intl Bhd to turn profitable by 2016. Ekowood is focus on its wood flooring business in SEA.

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