United Malacca Bhd

United Malacca Bhd

Postby winston » Sun Dec 20, 2015 8:38 am

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Historic first for United Malacca BY SHARIDAN M. ALI

It was a long-time coming but United Malacca Bhd (UMB) finally took the step the other big plantation companies have done for years.

The conservative plantation company surprised the market by moving to acquire 83% in Kalimantan-based Indonesian planter PT Lifere Agro Kapuas for US$66.4mil (RM285.02mil).

Apart from buying plantation land overseas for the first time, UMB is borrowing money to part finance the deal. That is another milestone as the company has never taken on debt for expansion since it was set up in 1910.

Deal wise, it seems like a good bet for it not only where pricing is concerned but also location-wise, fitting in well with its plantation profile.

The proposed deal announced earlier this week is slated to be completed in the first quarter of next year, pending Bank Negara approval.

Although the proposed acquisition represents a premium of 8.2% to the market value of the land (based on the 83% effective equity interest), UMB chief executive officer Peter Benjamin tells StarBizWeek that it is a good deal. This is in terms of pricing relative to the location of the land, infrastructure and relevant licences already obtained.

“It is located just two hours from the nearest city and the land is equipped with the necessary infrastructure.

“I would say it is quite a good deal as far as pricing is concerned, translating into US$3,000 per ha in general and about US$4,700 per ha in terms of planted areas.”

It is also a well-known fact that Kalimantan is an established area for oil palm as opposed to the other overseas locations beyond Malaysian shores.

Cash-rich and debt-free UMB will partly finance the proposed acquisition with a term loan it secured from OCBC Bank (M) Bhd for up to US$50mil (RM214.6mil).

The remaining portion will be financed via the group’s internal funds. As at Oct 31, the company had cash and cash equivalents of RM 69.72mil.

OCBC Bank Ltd is also the company’s major shareholder with a 14.14% stake.

The proposed acquisition would include 350ha for a refinery and bulking station located in Kalimantan Tengah and would expedite the company’s upstream expansion, as some 10,366ha have already been planted, with about 10,140ha being less than five years old.

“This acquisition is good for UMB in the long term. Investment in oil palm plantations is always with a long-term view and strategy. The crude palm oil (CPO) price trend has been fluctuating over the years. It has been predicted that the prices will improve next year with the downtrend in production,” Benjamin points out.

Plantation giants such as United Plantations Bhd and Sime Darby Plantations Bhd already have substantial operations in Kalimantan.

According to a back-of-the-envelope calculation that solely looks at price per ha, it has been reported that UMB seems to be getting a sweeter deal than the one struck between Felda Global Ventures Holdings Bhd (FGV) and the Rajawali Group.

FGV had proposed to buy a 37% stake in PT Eagle High Plantations Tbk for US$680mil (RM2.93bil).

Eagle High is reported to own 425,000ha of landbank, with 67% in Kalimantan and the rest in the Papua, Sulawesi and Sumatra provinces. This means that a 100% stake of US$1.84bil translates into US$4,324 (RM18,672) per ha.

Benjamin adds that with the increase in the world’s population and demand for vegetable oils, the prospects of CPO are very good.

“Prices will increase next year with lower production. We predict the average CPO price for 2016 to be around RM2,400 per tonne. We expect this to continue into 2017, unless crude prices start moving up,” he says.

According to MIDF Research, CPO prices are expected to benefit from the weak ringgit and surge above RM2,500 per tonne in the first quarter of 2016.

“We believe that a weak ringgit should lead to improved CPO competitiveness against other vegetable oils, especially soybean oil,” says the research house, adding that it has maintained a “positive” rating on the sector.

The CPO three-month futures had lost RM5 to RM2,380 per tonne as at press time yesterday, reflecting a high jump from its six-month low of RM1,867 per tonne recorded on Aug 26.

On age profile, Benjamin says that the age profile of PT Lifere Agro is below five years for the planted area of almost 10,000ha.

“Planted areas are only coming into maturity effective 2016. This bodes well for UMB.

“Our target is a high yield and a high oil extraction rate (OER) - that is the direction of UMB. Our current OER is about 20.5% and yield is 21 tonnes per ha.

“The average age profile of UMB is now nine years and PT Lifere Agro is three years. Hence, for the group, it is six years post-acquisition. Hence, the majority of our area is in the prime age profile with an upward trend in our yields in the coming years,” he says.

According to UMB’s 2015 annual report, about 53% of its oil palm is in prime production (eight to 15 years), while 14% is on an increasing yield trend (four to seven years) and 26% is immature (less than four years).

UMB posted an 11.8% decline in net profit to RM12.25mil for its second quarter ended Oct 30 from RM13.69mil previously, hit by lower fresh fruit bunch (FFB) production.

Revenue for the quarter fell 15.4% to RM49.87mil from RM58.96mil in the same quarter last year.

UMB’s earnings per share for the quarter was at 5.86 sen, while net asset per share stood at RM8.10.

Cumulatively, for the first six months of its financial year ending April 31, 2016 (FY16), the company posted a 8% drop in net profit to RM24.55mil from RM26.44mil previously due to lower average prices of CPO and palm kernel although it produced higher FFB.

Its revenue for the period declined to RM107.79mil from RM117.2mil previously.

Despite the decline in net profit, the company will be paying an eight-sen first interim single-tier dividend for its FY16, which is the same as last year.

Shares in UMB were hovering at RM5.95 as at press time yesterday, down one sen or 0.17%.

Source: The Star
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Re: United Malacca Bhd

Postby winston » Sat Aug 06, 2016 9:14 pm

United Malacca mulls diversification

BY HANIM ADNAN

AFTER 50 years of focusing on oil palm cultivation, planter United Malacca Bhd (UMB) will be looking to diversify into other commercial crops in the near future.

The group, however, will continue to expand its oil palm landbank via mergers and acquisitions, particularly in Indonesia, says its chief executive officer Peter Benjamin.

He points out that it has been UMB’s long-term business strategy to diversify into other crops with good potential as “the group has been dependent on a single crop for a long time”.

Of late, crude palm oil (CPO) prices have declined over 15%, impacting plantation companies across the board with few registering profit growth.

“Currently, the land we are looking at in Sulawesi is for industrial forest plantation where we can plant any crop except oil palm,” Peter tells StarBizWeek, adding that this actually fits well into UMB’s long-term plan.

UMB recently entered into an MoU with two Indonesia-based parties to establish a joint venture with PT Bintang Gemilang Permai (BGP), which holds 99.9% stake in PT Wana Rindang Lestari (WRL).

WRL in turn holds a concession right to develop about 59,920ha within an industrial plantation forest area in Central Sulawesi, Indonesia.

UMB would acquire 60% interest in the proposed JV with the acquisition price to be determined later. Peter says: “The current land (price) we are looking at in Sulawesi is still to be negotiated.”

TA Securities in its latest report says that UMB’s proposed acquisition, if materialised, will increase the group’s land bank in Indonesia from 24,585ha to 84,505ha.

However, according to the UMB management, since the land is part of the industrial plantation forest, they are allowed to plant any crops except for oil palm.

Thus, the land is currently undergoing topography studies by WRL and BGP and the possible crops that can be planted ranging from stevia to cocoa.

“We are not surprised by this news as the crop diversification plan is part of the group’s business strategy,” says the research unit.

Furthermore, Peter has vast experience in forestry and managing various crops such as cocoa, sago and rubber given his stint in various plantation companies both locally and abroad.

TA Securities also do not expect the acquisition price to be high as compared with the normal oil palm land.

“So far, not much detail is disclosed as the discussion is still at preliminary stage.”

It says that the discussion is expected to be finalised by first quarter of 2017.

Besides, the management has also shared that WRL and BGP have downstream business activities to complement UMB’s main upstream operations.

TA Securities is maintaining a hold recommendation on UMB with an unchanged target price of RM6.56 per share.

The key risk factors on UMB would be longer gestation period for the Indonesian plantation, global economic slowdown and lower CPO price.

On land bank price comparison, Peter says that for oil palm green fields in Indonesia it generally costs RM3,000 to RM5,000 per ha while in Malaysia depending on the location, it could vary from RM25,000 to RM50,000 per ha for green fields.

If it is nearer to town, the potential for development is better, then the price will be higher. Analysts say funding currently should not be an issue for UMB given its cash and cash equivalents of about RM100mil that it can tap to fund potential acquisitions.

Throughout the years, the conservative UMB has expanded into a mid-cap pure planter with total land bank of 48,695ha.

Out of this, 24,585 ha (or 50.5%) is located in Central Kalimantan, Indonesia and 24,110 ha (or 49.5%) in Malaysia. According to Peter, UMB’s oil palm plantations in Peninsular Malaysia and Sabah, all of which have been fully planted up. The group is also actively undertaking replanting on a yearly basis.

In Indonesia, he says: “We still have remaining 7,000ha to be planted for the next three years.

“In the meantime, we will continue to look at acquiring land bank in Indonesia.”

Hence, with land scarcity and the rising cost of labour in Malaysia, expanding into Indonesia seems to be the most sensible option, adds Peter.

At the close yesterday, UMB’s share price on Bursa Malaysia was one sen lower to RM5.65.

Source: The Star

http://www.thestar.com.my/business/busi ... ification/
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Re: United Malacca Bhd

Postby winston » Wed Mar 29, 2017 9:11 am

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United Malacca pre-tax profit up

KUALA LUMPUR: United Malacca Bhd’s (UMB) pre-tax profit for the third quarter ended Jan 31, 2017 rose to RM39.44mil from RM16.17mil in the same period a year ago.

Revenue increased to RM75.77mil from RM50.04mil previously, it said in a filing with Bursa Malaysia yesterday.

UMB said the remarkable performance was due to the positive plantation business profit from operations in Malaysia and Indonesia.

Meanwhile, the company said the dry weather due to the El Nino phenomenon, which affected the yields in the preceding financial year ended April 30, 2016 (FY16), would continue into the current financial year.

Source: Bernama
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Re: United Malacca Bhd

Postby winston » Sat Apr 01, 2017 2:22 pm

United Malacca bets big on cash crops

BY HANIM ADNAN

Peter says the group is waiting to finalise its proposed deal to undertake a joint-venture with an Indonesian party to develop about 60,000 ha land in central Sulawesi.


After 50 years in oil palm cultivation, Peter points out that the UMB group plans to venture into large-scale commercial crops such as coconut, cocoa, coffee and stevia in Sulawesi.

Of the total 60,000 ha, Peter has envisaged some 35,000 ha-40,000 ha would be dedicated to planting cash crops within the next 10 years.


“What we have in mind is to initially plant about 5,000 ha with coconut, cocoa (2,000 ha-3,000 ha) and stevia (3,000 ha)”


Analysts expect UMB to fork out between RM120mil and RM180mil in capital expenditure within the next 10 years for its new cash crop ventures in Indonesia.


On the palm oil business, Peter says the group’s cost of production is about RM1,400 per tonne of CPO in Malaysia. This year, he expects the average price of CPO to be in the region of RM2,600 per tonne.


Source: The Star

http://www.thestar.com.my/business/busi ... ash-crops/
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Re: United Malacca Bhd

Postby winston » Mon Jun 19, 2017 8:52 am

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STOCK ON RADAR
Trading Buy: UMCCA
Period: 4 weeks
Last px: 6.07
Upside: 6.20/6.40/6.52
Downside: 6.00/5.89
Cut loss: 5.87

Trading catalyst: We like UMCCA due to its young age profile (46% of its total planted landbank is aged <8 years), which in turn indicates decent FFB growth in years to come.

Meanwhile, the construction of 2 new palm oil mills will enhance UMB’s overall profitability.

Among its peers with similar size, UMB’s valuation is one of the lowest (from EV/ha angle), supported by strong FFB growth prospects and its plan to diversify into other food crops over the longer term (to cushion the price volatility of palm products).

Source: Hong Leong Broking
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Re: United Malacca Bhd

Postby winston » Mon Oct 02, 2017 10:02 am

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United Malacca confident of finalising Sulawesi land buy

by Sulhi Azman

KUALA LUMPUR: Oil palm planter United Malacca Bhd is confident of completing the establishment of a joint venture (JV) to develop nearly 60,000ha of land in Central Sulawesi, Indonesia, by the Oct 28 deadline, and start planting cash crops such as stevia and hybrid coconut there by as early as the second quarter of 2018, according to its executive chairman Datin Paduka Tan Siok Choo.

The Oct 28 deadline is the fourth six-month extension since the memorandum of understanding (MoU) was signed on July 29, 2016 between United Malacca and two Indonesian partners — Adhi Indrawan and Dr Kartika Dianningsih Antono — to establish a 60:40 JV company with PT Bintang Gemilang Permai (BGP).

BGP, via a 99.9% stake in PT Wana Rindang Lestari, holds the concession rights to develop the 60,000ha of a 60-year leasehold land in Central Sulawesi, of which 40,000ha is plantable.

“United Malacca is still ironing out several issues with the Indonesian parties and intends to accelerate the completion of the deal by signing two important agreements simultaneously, which we hope to conclude before the deadline expires,” Tan said, referring to the conditional sale and purchase agreement and shareholders’ agreement.

Among the issues that have prolonged the negotiation, she added, include the valuation of the said land and the finalisation of the short- and long-term business plans.

“I am not inclined to quantify the negotiation process with the Sulawesi partner in percentage format, as every issue that we try to iron out has an equal weighting. But so far, the preliminary outcome of the due diligence process has been very satisfactory to us,” Tan told The Edge Financial Daily in an interview.

If successful, the deal marks United Malacca’s maiden foray into Central Sulawesi, which is the group’s second venture in Indonesia, after Kalimantan.

Once the two agreements are signed, Tan said United Malacca will be a step closer to realising its strategy of diversifying its crop mix into the planting of cash crops such as stevia, hybrid coconut trees, cocoa and coffee in order to widen its earnings base and reduce dependency on a single commodity.

Tan said the cash crops have a relatively shorter period to maturity, lower planting cost and attractive profit margin.

“The first priority is to plant stevia and coconut, followed by cocoa and coffee, which are subject to the land topography and soil type,” she said.

As for coconut, United Malacca chief executive officer Peter Benjamin said its price is “holding good”.

“The demand for coconut water and oil remains strong. The price is also attractive, while the development cost is roughly the same as palm oil,” he said, adding that the price of cocoa — a crop that is native to Sulawesi — has remained resilient.

“Last year, [the] cocoa price touched a peak of RM12,000 per tonne, and now it has come down to RM8,000 per tonne. Still, the price is attractive,” he said.

On its prospects, Tan expects United Malacca to post “a much, much better growth” in the financial year ending April 30, 2018 (FY18) compared with its performance in the previous year.

“We are expecting the production of fresh fruit bunches (FFB) to rise from the second half of FY18, but the volatile crude palm oil price and uncertain weather pattern remain an inherent risk to earnings,” she said.

United Malacca posted a 41.9% increase in net profit to RM84.55 million in FY17 from RM59.57 million FY16, while revenue rose 33.5% to RM274.71 million from RM205.74 million.

In the first quarter of FY18, United Malacca saw net profit jump 87.1% to RM6.33 million from RM3.38 million a year ago, while revenue was up 29.7% to RM70.29 million from RM54.22 million.

As for FFB production, Tan said about 3,000ha of plantation trees are coming into maturity in FY18, compared with an average of 300ha to 400ha in the previous year.

“This will push up FFB yields in FY18 to be 12% to 15% higher than what we recorded a year ago,” Benjamin added.

At the same time, Tan also said the development of the Central Sulawesi land is expected to incur higher capital expenditure, which could result in lower dividend payments compared with the previous years.

Still, she said United Malacca will be very cautious about expenditures and ensure that there will always be enough cash to pay dividends to its shareholders.

As at end-FY17, United Malacca’s total borrowings stood at RM152.27 million.

“Until last year, we have never borrowed any money in our 106-year history. And I would like to keep it that way,” she added.

On the crude palm oil price, Benjamin said United Malacca expects it to average at RM2,600 per tonne in FY18, as all oil palm trees in Malaysia and Indonesia will be “fully recovered” from the El Nino effects of 2015 and 2016.

Meanwhile, Tan said United Malacca will not be aggressive in acquiring new land banks except if they are located in Kalimantan and “contiguous” with its current operations.

Source: The Edge

http://www.theedgemarkets.com/article/u ... i-land-buy
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Re: United Malacca Bhd

Postby winston » Fri Jun 29, 2018 10:08 am

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United Malacca warns of 'significantly lower' FY19 profit after annual earnings shrank 43%

by Adam Aziz

KUALA LUMPUR (June 28): United Malacca Bhd, who revealed that its net profit shrank 43% in its financial year ended April 30, 2018 (FY18), has warned that its FY19's earnings will be "significantly lower" due to adoption of the new accounting standards, the Malaysian Financial Reporting Standards, which will require the value of bearer plants to be amortised.

These bearer plants were previously classified as biological assets, the group said when releasing its FY18 results in a Bursa Malaysia filing today.

Notwithstanding the group's expectation of higher fresh fruit bunches production due to improved FFB yield from matured palms, and an additional 1,015 hectares coming into maturity, the additional amortisation of bearer plants would result in lower profit for FY19, assuming crude palm oil prices remain at current levels, the group said.

In its fourth quarter ended April 30 for FY18, the group's net profit sank 71% to RM8.52 million from RM29 million previously, on lower revenue, higher cost of sales and lower investment income incurred. Quarterly earnings per share (EPS) more than halved to 4.06 sen, from 13.86 sen a year ago.

The group proposed a second interim dividend of 6 sen per share — down from 15 sen in 4QFY17 — with ex- and entitlement date scheduled on July 26 and July 30 respectively.

United Malacca said the big drop in quarterly earnings was mainly due to average prices of crude palm oil (CPO) and palm kernel (PK) declining on-year by 20% and 29% respectively in the quarter.

Also contributing to the decline was the impact of 4,640 hectares of newly-matured palms that came into harvesting, with low FFB yield and high unit cost of production, the filing said. In addition, it's investment profit fell to RM180,000, from RM3.03 million a year ago.

The group blamed the same factors for decline in its full FY18 net profit, which slumpted to RM47.83 million, from RM84.55 million the year before, despite revenue growing a marginal 1% to RM277.73 million, from RM274.71 million.

Full-FY18 FFB production grew 13% on-year, it said — but CPO and PK average prices slipped 7% and 18% respectively for the period. Investment profit also fell 64% to RM3.27 million, from RM9.01 million.

Shares of United Malacca Bhd rose 2 sen or 0.33% to RM6.08 today, giving the group a market capitalisation of RM1.27 billion.

Source: The Edge

http://www.theedgemarkets.com/article/u ... -shrank-43
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Re: United Malacca Bhd

Postby winston » Wed Jun 24, 2020 8:29 am

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United Malacca returns to profitability in FY20 despite posting wider 4Q net loss

by Muhammed Ahmad Hamdan

KUALA LUMPUR (June 23): United Malacca Bhd widened its net loss to RM61.23 million for the fourth quarter ended April 30, 2020 (4QFY20), from RM10.82 million a year earlier.

This was recorded after taking into account an impairment on bearer plants of RM56.8 million.

Loss per share (LPS) stood at 29.22 sen compared with 4QFY19’s LPS of 5.16 sen.

However, quarterly revenue grew 52.74% to RM86.19 million versus RM56.43 million previously, the group said in its result filing with Bursa Malaysia today.

Overall, United Malacca said it recorded narrower plantation losses of RM4.1 million for its Malaysian and Indonesian operations compared with 4QFY19’s losses of RM13.3 million. This was achieved on the back of higher crude palm oil (CPO) prices in Malaysia and higher fresh fruit bunch (FFB) production in Indonesia.

For the full year ended April 30, 2020 (FY20), the oil palm company returned to profitability, raking in RM15.78 million in earnings compared with a net loss of RM39.03 million previously. This was contributed by a gain on disposal of non-current assets held for sale of RM103.2 million.

Earnings per share for FY20 stood at 7.52 sen compared with LPS of 18.61 for FY19.

Revenue for the period grew 44% to RM293.98 million from RM203.74 million previously.

The group has declared a second interim single-tier dividend of six sen for FY20, to be paid on Aug 26. Total single-tier dividend for FY20 is eight sen.

United Malacca’s full year performance was achieved on the back of higher unit cost of production and lower FFB production in Malaysia, and higher FFB production, improved yields and reduced transport costs in Indonesia.

The Indonesian operations, however, were dampened by low CPO prices and high unit cost of production arising from young matured area of 5,051 hectares (ha).

“The group achieved higher FFB production for the financial year ended April 30, 2020 compared with the preceding year despite the sale of four plantations with a mature area totalling 979ha during the year. We expect FFB production to increase during FY21 due to higher yields, better age profile and an increase in mature area in oil palm estates in Kalimantan, Indonesia,” it said.

Going forward, United Malacca said it remains focused on improving labour productivity and cost efficiency as well as increasing FFB yield. The group expects FY21 to be challenging due to an expected decline in market demand triggered by the Covid-19 outbreak while CPO price is likely to remain at the current level.

United Malacca closed the day flat at RM4.54. Its market capitalisation stood at RM952.35 million.

Source: The Edge

https://www.theedgemarkets.com/article/ ... q-net-loss
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Re: United Malacca Bhd

Postby winston » Mon Feb 15, 2021 3:04 pm

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CGS-CIMB initiates coverage on United Malacca, target price RM5.23

by Syafiqah Salim

The group appears fairly valued at current levels given its weak profitability but could rerate should the group unlock the value of its undervalued estates.

“We are forecasting FY21-23F y-o-y FFB growth of 9-11%, driven by new mature areas from its Kalimantan estates and improving yields from its Malaysian estates.

This as well as higher CPO prices relative to FY20 and the commissioning of their new Kalimantan mill are the key drivers to our forecast of a turnaround in net profit in FY21F”.


Source: theedgemarkets.com

https://www.theedgemarkets.com/article/ ... rice-rm523
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