THP to dispose of more non-core assets

> Group plans to offload holdings worth an estimated RM150m this year

KUALA LUMPUR: TH Plantations Bhd (THP) will put up more assets for sale this year following the disposal of THP Gemas Sdn Bhd, a non-performing asset of the group, last year.

The plantation arm of Lembaga Tabung Haji is planning to dispose of non-core, nonstrategic and underperforming assets with a combined estimated value of RM150 million this year.

Its CEO Datuk Seri Zainal Azwar Zainal Aminuddin said this is because not all plantations in its landbank are “good performing estates”.

“What we are also doing is to consolidate and to have only the best performing assets in our stable,” he said at a press conference after the group’s AGM yesterday.

“With that in mind we can continue to grow in terms of production,” he added.

Last year, the group disposed of its 2,819.27ha palm oil estates in Gemas, Negri Sembilan, for RM152 million, which partly contributed to a higher net profit of RM147.07 million for 2016, representing a whopping growth of 136.7% from RM62.13 million in 2015. Its revenue saw a 23.5% increase to RM562.31 million last year from RM455.3 million in 2015.

The group is stepping up its degearing efforts to keep its loans at optimum levels as it intends to pare down its gearing ratio, which is currently at 0.64 times, to 0.5 times this year.

“If we are highly geared it will erode our margins. Come May or June we are going to pare down the loans,” Zainal Azwar said.

“When we went on an aggressive growth trajectory we sort of went on an overdrive and we realised that we were also overgeared,” he added.

THP is anticipating a higher yielding pattern, which is expected to continue from this year until 2025, in line with its strategy of optimising the maturity of its palms.

Currently about 65% of its plantations are in the matured phase, 5% old, and the remaining immature.

The mature areas are expected to contribute to a steady revenue stream going forward, while the immature areas are expected to begin contributing in two to three years’ time.

Fresh fruit bunch (FFB) production is expected to increase by more than 10% this year to about 841,000 tonnes after declining by 8% last year due to the El Nino phenomenon. THP’s FFB production stood at about 721,000 tonnes last year.

The group owns 32 palm oil estates and seven palm oil mills.