Wednesday, March 2, 2011

RSAWIT ... Mar11

Rimbunan Sawit Bhd is a Sarawak-based palm oil company.

Starting with 13,663ha of palm oil estates at the time of its IPO, the Main Market-listed firm now boasts a total land bank of some 100,000ha. The company currently has reached the first 100,000ha-mark for its land bank and will continue to grow.

With the company aiming to grow further, will this eventually lead to the acquisition of palm oil estates abroad or injections of more land from its parent Rimbunan Hijau Group in the future?

It is Controlled by timber and media tycoon Tan Sri Tiong Hiew King. As at Jan 26 2011, Tiong alone controlled 61.33% of the company via direct and indirect stakes. Tiong also controls Media Chinese International Ltd (MCIL), which has publications in Malaysia, Hong Kong and North America. In Malaysia, MCIL’s titles include the country’s top-selling Chinese newspapers — Sin Chew Jit Poh, Nanyang Siang Pau, Guang Ming Daily and China Press. He is also a major shareholder of EON Capital Bhd.

Its net assets per share stood at RM3.18 as at Nov 30, 2010, with a price to book ratio of 0.73 times.

On Feb 11 2011, the company’s subsidiary RH Plantation Sdn Bhd entered into a memorandum of understanding with Sheba Resources Sdn Bhd to buy 4,857ha of oil palm plantation in Niah, Sarawak, for RM118 million. This follows its proposal on Feb 2, to buy out the State Financial Secretary of Sarawak’s (SFS) 15% minority interest in three Rimbunan Sawit subsidiaries, Nescaya Palma Sdn Bhd, Novelpac-Puncakdana Plantation Sdn Bhd and Woodijaya Sdn Bhd, by issuing 6.9 million new shares at RM2.30 each.

These acquisitions will make the three companies wholly owned subsidiaries of Rimbunan Sawit while SFS will become a minority shareholder of the enlarged capital of Rimbunan Sawit with a roughly 4.3% stake.

However, the company has a relatively high net gearing ratio at 96.7%. As at Nov 30, the company had RM334.99 million in long-term borrowings, RM77.1 million in short-term borrowings and RM5.51 million in cash. That translates to net debt of RM406.58 million against a shareholders’ fund of RM420.47 million.

Nevertheless, the company could opt for other corporate exercises such as rights issues to raise fund for its future business expansion, according to the company official.

Rimbunan Sawit currently produces up to 380,000 tonnes of fresh fruit bunches (FFB) a year while its average FFB yield per hectare stands at some 13 tonnes. In addition, about 70% of its estates are planted with young palms aged 10 years and below while about 50% of its total land bank is planted.

For the 15 months ended Nov 30, 2010, its revenue totalled RM263.47 million, up 32% from RM199.55 million in the previous corresponding period while net profit totalled RM50.48 million, more than double the RM22.62 million previously, according to the company’s financial statements. The company changed its year end from Aug 31 to Dec 31 last year. Basic earnings per share rose to 36.22 sen as at Nov 30, 2010 versus 17.63 sen a year earlier.

Rimbunan Hijau Group is the largest timber company in Malaysia and Papua New Guinea.

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