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IOI on the Lookout for New Plantations
29/10/2018The Malaysian Reserve

IOI Corp Bhd has been in talks with several companies from Malaysia and Indonesia to increase the group’s plantation assets. Its group CEO Datuk Lee Yeow Chor (picture) said the firm is looking at established plantations, specifically close to its existing estates.

“We prefer to have the additional plantations closer to our existing ones to ease the management process. Two-thirds of our plantations are in Sabah and the remaining in Peninsular Malaysia,” he said last Friday. As at June 30, 2018, the integrated palm oil provider has a total 175,117ha of planted area covering 90 estates and 15 palm oil mills.

According to a news report, IOI Corp has been named as one of the suitors for the takeover of another plantation player, IJM Plantations Bhd, due to its matured plantations in Sabah.

IJM Plantations has 61,000ha of planted area in Sabah, as well as in Kalimantan and Sumatera in Indonesia.

IOI Corp’s net profit for the financial year ended June 20, 2018 (FY18), has surged more than fourfold to RM3.06 billion from RM743.2 million in FY17. Its revenue inched 2.32% higher to RM7.42 billion from RM7.25 billion a year ago.

Lee said the group is expected to record a single- digit growth for its fresh fruit bunches (FFB) production for FY19 on the back of its Indonesian plantations, which are growing at an early stage, and its replanting exercise.

“We will not see much of a big growth this year and most of the growth will come from the FFB production in Indonesia, which is still very young.

“We expect the yield to increase as we are replanting our Peninsular Malaysia’s estates with new materials, which will be around 6,000ha to 7,000ha a year,” he added.

Going forward, Lee said China’s vegetable oil demand and the competitive oil prices would be the positive factors for the palm oil industry in 2019.

“We can see that the crude oil price is relatively high compared to a year ago. This will stimulate the export of biodiesel to Europe, in addition to Indonesia’s mandate for B20 biodiesel.

“Also, there is no denying the opportunity to export palm oil to China as they have been reducing the soybean imports from the US,” he said, adding that the effect will be prominent in early 2019 during the off-season production.

He said Malaysia is still getting strong demand from some Asean countries, Africa, the Middle East and India, which will continue to secure Malaysia’s palm oil sector.

“The forward sample price for crude palm oil is RM100 higher than the October delivery price as the production is expected to decline in January and February during the low production period,” he said.

IOI Corp’s share price felltwo sen or 0.44% to RM4.49 last Friday for a market capitalisation of RM28.3 billion.

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