PETALING JAYA (March 13, 2011): Delloyd Ventures Bhd’s plantation business could be on the road for a listing on Bursa Malaysia, with 2012 being the earliest targeted date, once it provides significant contribution to the group. For this year, the company is already expecting the plantation operations to overtake its automotive components division as the main contributor to profits for the first time. Delloyd is looking at a 20% rise in its 2011 revenue and net profit for the group. "We expect the group to generate more profit contribution from the plantation business than from the automotive components business this year, mainly due to higher crude palm oil (CPO) prices and improved fresh fruit branches (FFB) yield," Delloyd deputy CEO of corporate and business development, Leon Tee Wee Leng, told SunBiz in a recent interview.
When this happens, Delloyd may spin off its plantation business into a separate unit to be listed on Bursa Malaysia. "We plan to split our plantation and automotive operations into two separately listed units. We are still looking at the options that we have, but more importantly, the plantation business must grow sizeable enough to go for listing on the Main Market of Bursa Malaysia ... to report a net profit of at least RM40 million to RM50 million before it goes public," said Tee, adding that a spin-off and listing may happen in 2012 at the earliest. "If we were to go listing on the plantation counter, then we will acquire more stake in our 60%-owned Indonesian subsidiary (PT Rebinmas Jaya) which owns the three oil palm plantations in Pulau Belitung," he added.
Under Indonesian regulations, foreign investors can hold up to 95% of local plantation firms.
The total yield of Delloyd’s oil palm FFB is expected to increase by 20% this year from 110,000 tonnes in 2010, as the total matured area for oil palm at its three plantation estates in Pulau Belitung, Indonesia increased and start bearing fruits. The group also owns a 1,449ha estate in Sungai Rambai, Selangor. Tee said its first palm oil mill in Indonesia, which started operating in May last year, will also help boost Delloyd’s profits in 2011, as it processes its own crops as well as surrounding smallholders into CPO and palm kernels.
In the fourth quarter to Dec 31 2010, the group already saw profit contribution from the plantation business exceeding the amount made by its automotive components unit. Plantation accounted for RM11.14 million in earnings for the Oct-Dec period compared with RM10.77 million for the automotive components segment. For the full year, however, the automotive components segment was still the group’s top earnings contributor at RM43.37 million, compared with RM21.59 million from the plantation segment. Delloyd posted a net profit of RM47.55 million on revenue of
RM396.1 million.
Tee said given the positive outlook for the palm oil industry, particularly when CPO prices are on an upswing, Delloyd is looking at acquiring more oil palm land in Malaysia and Indonesia to add to its total landbank of 15,871ha now. "We are on the lookout for new plantation land in both Malaysia and Indonesia. We are looking for brown field plantations with part-mature and mature trees, measuring a minimum size of 1,200-1,600ha," he added. "The plantation business will gradually become a significant contribution to the group, as more of the oil palm plantation area in Indonesia mature. We foresee that the plantation division will probably outshine the automotive components business in terms of profit contribution," said Tee. – The Sun
By KANG SIEW LI
