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Mahamad Rodzi Abdul Ghani




Mahamad Rodzi Abdul Ghani


Business Times



Golden Hope projects average annual pre-tax RM550m
2 October ,2003 - GOLDEN Hope Plantations Bhd, soon to be an enlargedplantation company, expects to make an average annual pre-tax profit ofRM550 million for five years starting from this year to 2008.

The forecast is a 152.5 per cent jump from the pre-tax profit of RM360.6million Golden Hope recorded for its financial year ended June 2003, onthe back of RM2.8 billion revenue. It made a net profit of RM251.9million.

Golden Hope is undergoing a RM3.6 billion share swap arrangement withsister company Island and Peninsular Bhd (I&P) that will create two listedpowerhouses in the plantations (Golden Hope) and property development(I&P) sectors.

Golden Hope group chief executive Datuk Abdul Wahab Maskan said the profitforecast is based on the current and future trend of crude palm oil (CPO)prices which are expected to hover between RM1,100 and RM1,200 per tonnefor the next two years.

CPO prices are currently at the RM1,500-a-tonne level, Abdul Wahab toldreporters after briefing analysts and members of the Press in Kuala Lumpuryesterday

CPO prices are volatile and can dip below RM1,000 a tonne but such a droptakes a long time and does not happen overnight. I do not see it happeningin the near term.

For the medium and long term CPO prices are going to be friendly and maygo up to between RM1,300 and RM1,400 depending on forces of nature as wellas global supply and demand of the world’s 17 edible oils and fats, hesaid.

Abdul Wahab said should CPO prices dip below RM1,000 a tonne, the companywill still be profitable because its cost of producing a tonne of palm oilis RM500, which is to be trimmed further in line with increased plantingefficiency.

Golden Hope will also be cushioned in the event CPO prices fall as itstill has interests in some of its property companies, albeit at a smallerstake.

He added that the company is strong in downstream businesses such asresearch and development activities as well as in the oleochemicalsbusiness such as making detergents and soaps, which contribute about 10per cent to group earnings.

After the rationalisation plan, which started last month and is expectedto be completed by March next year, Golden Hope will have 99.6 per centcontrol of I&P’s plantation unit, Austral Enterprise Bhd.

I&P in return will buy three property companies from Golden Hope 60 percent of Golden Hope Development Sdn Bhd, 60 per cent of Golden HopeProperties Sdn Bhd and 100 per cent of Golden Hope Johor Sdn Bhd.

Upon completion of the scheme, Golden Hope will be the second largestestate owner in the country after the Federal Land Development Authorityor Felda with its plantation size increasing from 129,093ha to more than200,000ha. Felda has a landbank of more than 800,00ha.

Golden Hope’s planted oil palm area growth will increase from 91,162ha to129,474ha upon completion of the reorganisation.

Meanwhile, I&P’s landbank will grow from 1,000ha to 9,158ha, making it thelargest landbank owned by a property company.

Once the exercise is completed, Golden Hope will have an enlarged marketcapitalisation of RM6.9 billion from RM3.5 billion previously whichcarries a ranking of 15th from 29th before. Share capital will expand toRM1.4 billion from RM1 billion.

Its net tangible assets will be maintained at the RM4.4 billion levelwhile earnings per share will ease slightly to 21 sen a share from 24 sen.

The rationalisation exercise is in line with the Government’s call inMarch to merge state-controlled companies in the same businesses usuallyheld through Permodalan Nasional Bhd (PNB), Minister of Finance Inc andits wholly-owned subsidiary Khazanah Nasional Bhd into larger, leanerentities to attract foreign investors.

After the rationalisation exercise, PNB will control 58.2 per cent ofGolden Hope and 58.1 per cent of I&P.

The on-going rationalisation exercise with I&P is positive to Golden Hope,giving it better size, economies of scale, better efficiency andcompetitiveness, said Abdul Wahab.

He added that the enlarged plantation entity will also see an increase inyearly fresh fruit bunches production by more than 40 per cent from thecurrent combined 2.8 million tonnes a year.

The post-merger period will position Golden Hope with better prospects infuture productivity and production output by having over 90 per cent ofthe total planted area with matured oil palm which will give Golden Hope astrong upside.

Golden Hope has more than 159 years of plantation management experience,expertise and business successes.

In May, Kumpulan Guthrie Bhd, which is also controlled by PNB,rationalised its subsidiaries Highlands & Lowlands Bhd (H&L) and GuthrieRopel Bhd. Under this move, Guthrie Ropel turns into a pure plantationentity while H&L becomes a property company.