Boustead sees bountiful year amid high CPO prices

KUALA LUMPUR: BOUSTEAD Holdings Bhd expects to rake in record profit this year as palm oil prices continue to trade at buoyant levels of around RM3,000 per tonne.

Out of its six core businesses, plantation is the biggest earnings contributor, followed by shipbuilding and property development. In the three quarters ended September 2011, Boustead's plantation division contributed RM267.1 million or 45.5 per cent to the group's RM585.9 million pre-tax profits.

So far, Boustead makes an annual profit of between RM450 million and RM700 million.

Although palm oil prices have been settling from its high of RM3,800 per tonne nine months ago, the third-month benchmark palm oil futures contract on the Malaysia Derivatives Exchange is averaging at around RM3,100 per tonne. Yesterday, the contract closed RM25 higher at RM3,097 per tonne.

"We're looking at record profits this year as palm oil prices are still strong," said Boustead deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin.

The group has an agriculture land bank of 97,648ha and so far, three quarters of that are already planted with oil palms.

"Our tree profile is at a favourable phase, of which 46 per cent of our oil palms are of prime ages. We expect to harvest about 1.1 million tonnes of fresh fruit bunches this year," he said.

With promising results, Boustead is setting aside RM1.4 billion in capital expenditure for next year. "About 30 per cent of the money will go to plantation," said Lodin.

Yesterday, both Boustead and Pharmaniaga Bhd shareholders approved all resolutions to have Boustead's entire pharmaceutical division placed under Pharmaniaga.

Lodin said the corporate move will allow Pharmaniaga to expand its manufacturing capacity in Kedah and Perak. "Our total capital expenditure for the pharmaceutical division amounts to RM95 million, of which a third will go to the information system," he added.

Pharmaniaga is in the business of making generic drugs. It also supply, trade and install hospital equipment. Last year, it secured a 10-year concession to distribute medicine to government hospitals and clinics.

"We have a 10-year supply concession to all 3,750 healthcare outlets under the Health Ministry throughout the country. The book value is worth some RM900 million," said Pharmaniaga managing director Datuk Farshila Emran.

Lodin said Boustead is still interested in buying ExxonMobil Corp's oil and gas assets in Malaysia, if the latter's deal with San Miguel Corp does not materialise. "We first had a discussion with Esso in August last year. If there is a review with whomever they have made an agreement with, we are open and prepared to talk to anyone," he said.

San Miguel, in August, agreed to buy Exxon's entire 65 per cent stake in Esso Malaysia for about US$206 million (RM655 million), or RM3.50 per share. This will give it control over a chain of petrol stations and one refinery with a capacity of 88,000 barrels a day. Although the deal won the government approval last month, it has yet to be concluded.

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LTAT does not dismiss prospect of privatising BHIC

KUALA LUMPUR: The possibility of the Armed Forces Pension Fund or Lembaga Tabung Angkatan Tentera (LTAT) being the vehicle to privatise Boustead Heavy Industries Corp Bhd (BHIC) is increasing.

Tan Sri Lodin Wok Kamaruddin, who is LTAT chief executive, did not dismiss the prospect of LTAT privatising BHIC. He, however, denied that BHIC's parent, Boustead Holdings Bhd, planned to privatise BHIC.

"Once again, we confirm that Boustead does not have any intention to privatise BHIC. We can't comment on what LTAT is going to do about BHIC," said Lodin, who is also Boustead deputy chairman and group managing director. "That you would have to ask LTAT. It is for LTAT's board of directors to collectively deliberate upon," he told reporters after Boustead's shareholders meeting here yesterday.

A research house highlighted that a privatisation made sense given that BHIC's earnings visibility looked secure for the next 10 years after being awarded a RM9 billion contract from the Defence Ministry to design, build and deliver six second-generation patrol vessels.

It could also be advantageous for LTAT to privatise BHIC to avoid public disclosure and scrutiny, given the sensitivity of such government defence contracts.

LTAT owns 61 per cent of Boustead and 8.15 per cent of BHIC. When pressed on what he thought of such a suggestion published in the media, Lodin said: "Anyone can air their views in the newspapers."

On whether LTAT is considering loosening its grip on Boustead to increase share liquidity, he said: "It is good to have liquidity. LTAT will do so at the right time and right price and make some capital gains along the way."

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