QL ... Sep10

The company was setting aside up to RM600 million for capital expenditure (capex) in the current and next two financial years, as it pursued organic expansion and acquisitions.

The company is expected to earmark some RM200 million in the current financial year (FY) ending March 31, 2011, while FY12 and FY13 may each see capex allocations of between RM150 million and RM200 million.

About 40% of the planned capex for the three years is intended to finance expansion of the group’s plantation business which involves downstream projects, including the commercialisation of palm biomass as a source of renewable energy.

QL Resources’ marine products, and poultry farming units will each be allocated 30% from the planned budget which would be financed via the group’s internally-generated funds or bank loans.

The company may also raise money via a private placement of new shares, or bond issues.

The investment would be used to further beef up its core businesses, namely integrated livestock farming, marine product manufacturing and palm oil activities.

To date, the major contributor to its total net profit is the integrated livestock farming segment at 50.5 per cent, followed by marine product manufacturing at 43 per cent and palm oil activities at 6.5 per cent.

The investment is also to finance potential local and regional merger and acquisition activities in future. All the way, they have been growing through acquisitions and organically.

For the livestock business, the company has set up new poultry farms in Ho Chi Minh, Vietnam, and Cianjur, Indonesia, in the middle of this year and these facilities are expected to start contributing to earnings in the next financial year ending March 30, 2012.

For marine product manufacturing activity, the company was currently working on its Green Fishmeal Production Scheme project which aimed to reduce carbon footprint, local air pollution and improve product quality in the marine products manufacturing division. QL Resources is operating three fishmeal manufacturing plants at Hutan Melintang in Perak, Tuaran in Sabah and Endau in Johor.

For palm oil activities, the company was setting up a renewable energy technology in pellet biofuel project, a biomass energy initiative in Indonesia. QL Resources developed its third crude palm oil (CPO) mill in Indonesia in June 2010 and its completion is scheduled to be in December next year. The company already has two CPO mills in Tawau, Sabah, with a combined annual production capacity of 600,000 tonnes.


Having acquired a controlling stake in a local egg-producing rival, the spotlight now falls on QL Resources’ overseas expansion as it pursues organic growth, and positions itself for potential acquisition opportunities.

It expects to register its maiden foreign income from Indonesia and Vietnam in the next financial year ending March 31, 2012 as the company’s operations in these countries take shape.

It would continue to look at acquisition opportunities abroad as long as there was a strategic fit with its core operations.

Apart from expanding its core businesses through acquisitions, QL Resources may also evolve into an independent power producer with its palm biomass pelletising project

QL Resources’ palm biomass project may potentially see the company evolve into an independent power producer (IPP).

Excess electricity generated from the company’s palm biomass pelletising project could be sold to state-owned utility Tenaga Nasional Bhd. This concept is not green IPP yet.

It had finalised the pre-commercialisation stage of the renewable energy project. This step enables the company to start commercialising the empty fruit bunch-based pellet, via the 40,000-tonne per year plant within its palm oil mill in Tawau, Sabah.

QL Resources’ renewable energy initiative essentially uses palm oil mill effluent to generate methane. This in turn is used to generate electricity for the production of the pellets, deemed an alternative source of fuel to hydrocarbons such as coal.

The zero-waste renewable energy project, which constitutes a part of the company’s bigger plan to develop palm biomass renewable energy business in Malaysia and Indonesia, will start operations by year-end.

QL Resources is certainly moving forward.

The company is not only expanding its integration processes within its core surimi, poultry and palm oil divisions, but also extending its tentacles to complementary and offshoot businesses, such as biomass energy.

QL Resources’ net profit rose by 20.1% to RM26.8 million, or 6.86 sen a share, in the first quarter ended June 30, 2010, compared with RM22.32 million, or 5.69 sen a share, previously. Revenue grew 7.9% to RM384.51 million from RM356.34 million.

As at June 30, 2010, its net assets per share stood at RM1.35.

The company had cash of RM70.72 million and debts of RM401.42 million. This translates into a net debt position of RM330.7 million, or a net gearing of 0.6 times based on the company’s equity of RM526.66 million.