HAP SENG ... Jun 09

HAP SENG'S 1QE MAR 2009 NET PROFIT DOWN 72% SAYS THAT IT WILL BEEF UP FERTILISER BUSINESS IN MALAYSIA & INDONESIA

HAP SENG recorded Net Profit of RM17.4m, or 3.09 sen per share, for 1QE Mar 31, 2009 compared with RM62m, or 11.02 sen per share, a year ago. In an EXCHANGE filing on May 29, 2009, the Company said that the drop in profit was mainly due to lower contribution from its fertiliser trading division.

TO STRENGTHEN FERTILIZER BUSINESS
The diversified Group said that it will continue to strengthen its fertiliser business in Indonesia and Malaysia while eyeing new markets in the South-East Asia region.

NO 2 IN INDONESIAN FERTILIZER BUSINESS
MD - EDWARD LEE said the Group would focus on Indonesia given its aggressive oil palm cultivation as reflected by the significant hectarage increase over the years. HAP SENG is now among the top two fertiliser suppliers in Indonesia, with warehouses and strong distribution network after just three years in operation and with about 22% market share in murate of potash (MOP) there.

In 2008, the Group supplied about 490,000 tonnes of fertiliser to Indonesia. Given the more competitive environment, especially logistics, in Indonesia, HAP SENG would normally hold over three months' fertiliser inventory for the market, LEE added.

MALAYSIAN FERTILIZER BUSINESS
In Malaysia, HAP SENG supplied about 650,000 tonnes of fertiliser in 2008 and, to date, has captured about 30% of the local MOP market.

LEE said the fundamentals for fertilisers looked good given the increasing food production globally, with the prices of most soft commodities like crude palm oil and grains, improving in 2Q-CY2009.

PROPERTY DIVISION
On its property division, HAP SENG wanted to remain as the market leader in landed property development in East Malaysia, he said, adding that new township projects in Lahad Datu and Tawau will contribute positively to the Group.

LEE said the Group also had about 2,100 acres in Sabah and over 500 acres in Sepang for its future property development projects.

On the Group's building, 'Menara Hap Seng' in Kuala Lumpur, he said the tenancy rate is very healthy with our tower block securing 97% occupancy and the podium block about 91% occupancy.

He said the Group planned to look at niche development whereby it could enhance the value of the building via refurbishment thus securing better occupancy and rental rates.

AUTO DIVISION
On HAP SENG's automotive division, LEE said the Group was targeting 30% share of the Klang Valley's Mercedes-Benz market. HAP SENG operates Mercedes-Benz dealerships in the Klang Valley through its state-of-the art Mercedes-Benz Autohaus showroom in KL and 25 Service Centers at Kinrara Industrial Park, Puchong.

The auto division is also the exclusive dealer of Mercedes-Benz vehicles and Mitsubishi Fuso trucks in Sabah and Sarawak.

PLANTATION DIVISION
As for the Group's plantation activities undertaken by its 51.55% listed subsidiary, HAP SENG PLANTATIONS HOLDINGS, LEE said they would continue to remain a major contributor to the Group's profits.