KUB gets 99.9% shareholders’ nod to acquire Sabah land for RM100.4mil

SHAH ALAM: KUB Malaysia Bhd received an almost unanimous 99.9% shareholders’ approval for the acquisition of a brownfield oil palm plantation land in Sabah.

Its unit KUB Malua Plantation Sdn Bhd will purchase 1,534 ha of leasehold land from a unit of Kwantas Corp Bhd for RM100.4mil.

KUB Malaysia president and group MD Datuk Abdul Rahim Mohd Zin said the land was expected to generate immediate revenue and contribute positively to the group’s earnings.

The new plantation land, he said, was expected to contribute to 31% of the group’s agro arm revenue and about 3% to the group.

“The acquisition of the land is part of our strategic focus since 2015 to focus on three core sectors, of which, the agro sector is one.

“Part of the stated goals for the agro business is to increase our landbank.

“It is a brownfield asset which will yield immediate earnings – more that 80% of the plantation area is at its high yielding stage,” he told a press conference after the group EGM yesterday.

He said the average yield recorded for the Sabah plantation land in 2016 was 24 tonnes per ha, well above the industry average recorded for the state of about 17 tonnes per ha.

He said the acquisition will increase the group’s total plantation land bank to 8,866 ha from 7,332 ha.

Abdul Rahim said the exercise, expected to be completed by the fourth quarter of 2017, will be funded via a combination of internally generated funds as well as bank borrowings, but the ratio had not been determined yet.

“It is our plan to continue to increase our plantation landbank but we will do it cautiously, to ensure we get good value.

“We found a good deal in this particular acquisition,” he said.

On another matter, he said the group expected to see better FFB production from its plantations this year, and for CPO prices to be at an average of RM2,500 per tonne for the rest of the year.

On its A&W chain of restaurants, Abdul Rahim said they would be opening 25 outlets over the next three years.

The group has 34 outlets at the moment, and is in the midst of identifying locations for the new outlets.