Green Ocean seeks more loans

> Entry of major shareholder will help boost funding, ramp up production for the group, says CFO

KUALA LUMPUR: Green Ocean Corp Bhd, which saw net loss for the first quarter ended June 30, 2017 widen to RM414,000, is looking to expand its borrowing lines to ramp up production, which has been constrained by the lack of capital.

Green Ocean’s palm kernel processing plant, which has a capacity of 8,000 tonnes, is being severely under-utilised, running at only about 1,000 tonnes, due to working capital restrictions which have limited its ability to procure raw material and keep stock of it.

Group CFO Yong Wai Kin said the entry of major shareholder Datuk Seri Chiau Beng Teik as its chairman is expected to help its efforts to secure more financing.

On June 15, the group announced the appointment of Chiau,who holds 15.74% interest in Green Ocean. He also sits on the board of Chin Hin Group Bhd.

“Chiau came in as one of the major shareholders. Of course … in this palm oil industry we need a lot of working capital, (which) we are currently lacking. (With) Chiau coming in as a shareholder, he would actually get the bankers to increase our banking lines,” Yong explained, citing Chiau’s strong corporate background.

He added that increasing palm kernel crushing activity will help the group improve its earnings and is necessary for the group to maintain its stocks.

“To keep stocks, we need to have working capital to crush the palm kernel to produce sufficient crude palm kernel oil (CPKL),” Yong said.

“Palm kernel is our raw material. If we buy cheap (raw material), we sell cheap (CPKL). If we buy expensive, we sell high. We must be able to keep the stocks.”

Ramping up production will enable Green Ocean to bag long-term contracts to supply CPKL, he added.

Prices of CPKL which have been fluctuating, hit RM4,894.24 a tonne in mid- August, which is the highest since May 25.

Meanwhile, in a filing with Bursa Malaysia, the group attributed the higher loss to lower profit margins from trading activities, and higher financing cost arising from drawdown of new bank borrowings.

Green Ocean had posted a net loss of RM269,000 for the same quarter last year.

The wider loss was despite a 34.65% increase in revenue to RM71.30 million from RM52.95 million in the same period last year on the back of higher trading activities.

The group had about RM680,000 cash as at June 30, 2017. Its borrowings stood at RM6.6 million.

Green Ocean’s share price closed unchanged at 16 sen yesterday. It has a market capitalisation of RM42.13 million.