Kalimantan land sale a significant pivot for TSH
TSH Resources Bhd’s (TSH) sale of its 13,898 hectares (ha) of mostly unplanted agriculture land in Kalimantan for RM731 million cash was a significant pivot for the planter as it was saddled with RM637 million in net debt in April 2022.
To note, 781ha of the land was sold in August 2022 followed by another 575ha in January 2023.
All in all, TSH has received RM457 million in cash.
Coupled with operating cash flows, net debt has been pared to just RM88 million as of September 2023.
The disposal of the remaining 5,506ha for RM274 million cash should conclude by mid-2024.
“Altogether, the divestment has already enabled TSH to substantially de-gear and the group can now consider expansion once again,” commented the team at Kenanga Investment Bank Bhd (Kenanga Research).
“After the Kalimantan land sales, TSH should still have 60,000 ha of land left with only 40,000ha planted up with oil palm.
“More importantly, the divesture has allowed TSH to recapitalise and it is now planning to develop new oil palm area.”
Kenanga Research noted that a new nursery and planting team are now in place and the group is aiming to plant 8,000 to 10,000ha of new area over the next two to three years.
The estimated capex of RM200 million to RM300 million will be funded by a mix of sale proceed, operating cash flows as well as borrowings.
In September 2023, SGX welcomed the secondary listing of TSH to its Mainboard.
TSH’s primary listing remains on Bursa but sees wider opportunities with a SGX presence.
“Firstly, the bulk of TSH’s earnings are already from Indonesia; hence, an SGX listing could provide greater flexibility in terms of funding; regional growth; and wider carbon-related opportunities in term of market or trading including renewable energy and sustainable forestry where TSH manages over 100,000ha in Sabah.”
Looking forward, AmInvestment Bank Bhd (AmInvestment Bank) plans to carry out new plantings of 800ha to 1,000ha of oil palm trees in Indonesia in FY24.
“TSH has already received approval from the Roundtable of Sustainable Palm Oil (RSPO) for the new plantings. We estimate that TSH has a plantable landbank of 8,000ha to 10,000ha in Indonesia.
“TSH’s capex is envisaged to increase to RM110 million in FY24 from RM70 million in FY23. This is mainly due to new plantings of oil palm and the construction of a RM20 million biogas plant in Central Kalimantan.”