PLS Plantations to venture into durian industry
KUALA LUMPUR: PLS PlantationsBhd(PLS)viaitswholly owned subsidiary, Brighthill Synergy Sdn Bhd (Brighthill) is venturing into durian businesses via a combination of shares acquisition and share subscription into Dulai Fruits Enterprise Sdn Bhd (Dulai Fruits), which possesses solid track record and expertise in durian plantation, manufacturing, exporting and downstream products.
PLS is currently primarily engaged in the management and operation of forest plantation and oil palm plantation. Taking into consideration the viability and growth prospects of the durian businesses, PLS, via Brighthill is investing and acquiring a 70 per cent stake in Dulai Fruits to diversify its revenue and earnings stream to enhance PLS' profitability and shareholders' value moving forward.
Total purchase consideration for the 70 per cent acquisition is RM21 million, with RM18 million to be satisfied via issuance of 24 million new ordinary shares in PLS at an issuance price of RM0.75, and the balance of RM3 million will be satisfied in cash via subscription of 600,000 new ordinary shares in Dulai Fruits. Dulai Fruits is one of the pioneers in exporting Malaysia durians. The shareholders have 30 years of durian plantation experience and Dulai Fruits has 10 years of exporting track record.
To date, Dulai Fruits has successfully penetrated close to 10 countries around the world including China, Hong Kong, Australia and US. Additionally, Dulai Fruits is a licensed exporter and importer of durians for Malaysia and China.
“Acquisition of Dulai Fruits is part of the key diversification business strategies of PLS group which will provide a new viable stream of revenue to the group. Taking into account the strong growth prospects of the durian business in Malaysia as well as China huge potential market, we are optimistic that this strategic acquisition will bring forth positive earnings contribution to the group in the long run,” said PLS executive director Lee Hun Kheng.
Soaring demand for Malaysia durians especially in the Chinese market has led to increased interest in large-scale durian farming in the country. The Malaysia king of fruits' selling price can go up to US$73 (RM300) per kilogram in China.
According to Mintel's The Chinese Consumer 2017 report,over half of all consumers are willing to pay a higher price for better product performance (for example, better taste) and this translates to durians as well. Malaysia is well known for its high quality durians that come in more than a hundred varieties depending on textures, colors, brix, moisture and aroma, with the Musang King driving the craze with extremely high demand in the country.
Eric Chan, the current major shareholder and managing director of Dulai Fruits, said that they are confident the popularity of Malaysia durians will continue to grow and be accepted worldwide.
“We will be joining hands with PLS Plantations Bhd to enhance our upstream capabilities with long term sustainable supply. With a strong partner like PLS, we are looking into the possibility of expanding downstream and creating more valuable products using Malaysia durians.
“We will also invest further in research and development (R&D) to help the industry to develop more advanced agriculture technique on durian plantation and manufacturing.”