TDM raises stake in Terengganu palm plantation
It’s confident of growing Ladang Rakyat’s ops via efficient technology
KUALA TERENGGANU: TDM Bhd is buying additional stake in an oil palm plantation in Terengganu from its parent, as the company seeks majority control of the estate.
TDM yesterday entered into a heads of agreement with its holding company Terengganu Inc Sdn Bhd (TI) to buy the latter’s 42.64% stake in Ladang Rakyat Terengganu Sdn Bhd.
Prior to the proposed acquisition, TDM owned 19.12% while the remaining stake is held by Terengganu-based government-linked company Ketengah Holdings Sdn Bhd.
Group managing director Datuk Mohamat Muda said TDM is confident of growing Ladang Rakyat’s oil palm plantation via the company’s efficient technology and best practices.
Ladang Rakyat is a 11,467ha of oil palm plantation with an average tree age profile of nine years. The proposed acquisition will turn Ladang Rakyat into a subsidiary of TDM.
The group’s reported oil palm plantation acreage in Terengganu will also increase from 31,848ha to 43,315ha. This is because TDM’s stake in the estate was previously treated as an investment.
The RM1.1bil market-value company also has plantations in Kalimantan, Indonesia, consisting of 12,645ha but it is relatively young since the company started planting in 2010.
According to TDM’s filings with Bursa Malaysia, Ladang Rakyat reported a net profit of RM8.3mil for the financial year 2013 (FY13), RM2.2mil in FY14 and RM4.1mil in FY15.
“We will fund the acquisition through internally generated funds, private placement or share swap. But this will be decided upon carrying out due diligence and valuations on Ladang Rakyat’s plantation,” Mohamat said.
As per TDM’s announcement, it expects to sign a definite agreement with TI within six months.
While all of TDM’s plantations in Terengganu were Roundtable on Sustainable Palm Oil (RSPO)certified, Mohamat said the longterm goal is to bring down the average age profile of TDM’s oil palm trees to 12 to 13 years.
The average age profile of its plantations here are in the range of 16 to 17 years.
“The average age profile of 12 to 13 years is considered the optimum age for production. We intend to have RSPO status for Ladang Rakyat as well,” Mohamat told StarBiz after unveiling TDM’s new Tranformation Model.
The event was officiated at by Terengganu Mentri Besar Datuk Seri Ahmad Razif Abdul Rahman.
During the launch, TDM outlined its plans in expanding its plantation efficiency and secondary healthcare segment.
Mohamat explained that TDM has set a target of 22 tonnes per ha in fresh fruit bunches (FFB) yield by 2022, apart from reducing production costs by 5% and improving FFB quality.
Currently, TDM’s FFB yield stood at 15.04 tonne per ha.
“We expect production to improve this year due to better weather conditions,” he noted.
For FY16, TDM recorded a production cost of about RM1,550 per tonne crude palm oil.
On its healthcare division, Mohamat said the target is to increase its bed size to 1,000 by 2022, from 297 beds now.
“While we meet the requirement set by Bursa Malaysia to list our healthcare unit, we want to grow our bed size substantially to ensure that we have a stronger footing.
“But we will maintain our focus on providing affordable healthcare services,” he said, adding that the group has targeted for its new Kuala Terengganu Specialist Hospital to open in July this year. The facility has 143 beds.
Trading in TDM was suspended at 2.30pm yesterday. It was last traded at 73 sen, with 1.1 million shares changing hands.