Price: MYR6.05
12-Month Target Price: MYR7.80
Market Value - Total: MYR1,227.1 mln
Summary:
Sarawak Oil Palms (SOP) cultivates oil palm and operates palm oil mills. It has over 60,000 hectares of plantation land in Sarawak.
Analyst: Siti Rudziah Salikin
SOP’s 1Q08 performance was within our expectations. Net profit grew over four fold to MYR43.6 mln driven by higher palm oil selling prices and sales volume.
The benchmark Malaysian Palm Oil Board’s average spot price was about MYR3,490/ton versus MYR1,950/ton in 1Q2007. The better selling prices outweighed the increase in production costs brought about by higher prices of crude oil and fertilizer.
(just benchmarking from mpob, not the actual sop selling price.)
SOP’s crude palm oil production rose by over 40% YoY to 42,849 tons due to a bigger harvesting area, improvement in yields and higher FFB intake at the palm oil mills. The total capacity at the mills, which processes FFB from SOP’s own estates and outside purchases, was increased to 225 tons/hour in 4Q2007 from 168 tons/hour.
We maintain our projected net profit growth of 61.7% YoY for 2008 to MYR176.7 mln, which assumes average CPO price of MYR3,200/ton.
We reiterate our Strong Buy recommendation on the stock with an unchanged 12-month target price of MYR7.80.
At a PER of 7.3x (on fully-diluted earnings for 2008), we believe the share price has not fully factored in the potential long-term growth for SOP arising from the young profile of its existing planted areas and the new plantings.
We use a discounted cash flow method to value SOP assuming: (i) SOP will undertake 5,000 ha of new plantings per year at its existing undeveloped land; (ii) the entire planted area will reach full maturity by 2020; (iii) long-term CPO price of MYR2,500/ton; and (iv) a weighted average cost of capital of between 10.2% and 11.4%. We add our projected dividend of 6 sen per share for 2008 to arrive at the target price.
Dividend payout ratio is likely to stay low due to the group’s long-term objective of sustaining growth by substantially reinvesting its profits.
Risks to our recommendation and target price include (i) a reversal of the CPO price uptrend, which could be caused by increased global acreage of oilseeds and volatile energy prices, (ii) delay in the completion of its new plantings; and (iii) a potential windfall tax to curb
inflation.
filed: sp SOP 1Q08 results.pdf
31 May 2008
27 May 2008
jatropha
29-04-2008: DPS sees RM227m profit a year from jatropha plan
DPS Resources Bhd recently entered into a memorandum of understanding (MoU) to carry out research and development (R&D) on the cultivation of jatropha plants for biofuel production on a joint-venture (JV) basis with a Chinese company.
OSK Research has projected that the JV company would have an annual turnover for jatropha oil and by-products of RM720 million and RM360 million respectively, with net profit margin estimated at 35% to 40%.
The management indicated that DPS would hold 60% of the JV, said OSK Research. Assuming the ratio, this would increase DPS’ revenue by approximately RM650 million, which translated into an additional net profit of RM227 million per year, it added.
However, the research house said that it did not factor this into its forecasts as the venture was still in its infancy stage and it would take at least 10 years to achieve a full planting land. “The proposed investment is estimated at RM270 million, to be expended over the next 10 years, so as to achieve 66,343ha of planting land and 300,000 tonnes of biofuel production capacity per year,” it added.
“While its diversification into the biofuel business may be lauded given that the jatropha is seen as one of the best candidates for future biodiesel production, we remain conservative on this exercise as it is an unproven venture and DPS does not have any prior experience in the cultivation of the jatropha plant,” OSK Research said in maintaining its neutral call on DPS with a target price of 31 sen, pending further details.
DPS recently announced that its board had approved the MoU signed with Hainan LVBO Industry and Commerce Company Ltd (HLICC) to carry out R&D on the cultivation of jatropha plants for biofuel production on a joint-venture basis.
HLICC has been conducting research on the cultivation of jatropha trees for biofuel production for six years and has a 12.3ha research centre in Hai Kou, China.
According to DPS’ announcement to Bursa on the JV, HLICC was currently researching a new species of jatropha trees which yield higher levels of oil content, toxicity and oil extraction rate.
DPS closed unchanged at 30.5 sen yesterday with 61,000 shares traded.
13-02-2008: Carbon Capital Corp, Japan firm to invest RM2b in SCORE
by Ellina Badri
PETALING JAYA: Clean development mechanism (CDM) services provider, Carbon Capital Corporation Sdn Bhd is teaming up with Japan Carbon Mercantile Co Ltd (JCM) to undertake renewable energy projects worth RM2 billion.
Carbon Capital group managing director, William Kho said the two-phase project was part of the Sarawak Corridor of Renewable Energy (SCORE) initiative. The parties would jointly fund the project on 51:49 basis, he told The Edge Financial Daily.
“We are targeting to kick off the first phase in the middle of this year and are now negotiating with the state government for the land for the project,” Kho said.
On Monday, the two companies signed a memorandum of understanding (MoU) in Kuching for phase one of their programme which would require US$300 million or about RM1 billion, and be developed over five years.
The projects included developing a multi-feedstock biodiesel plant with an annual capacity of about 240,000 tonnes a year, and bulking facilities in Tanjung Manis, Sarawak.
The MoU would also see the JV developing 100,000 ha of jatropha and oil palm plantations, and potential biogas or biomass renewable energy projects under CDM programmes in Sarawak.
The second phase would involve increasing the capacity of the biodiesel plants to 500,000 tonnes a year and the development of another 100,000 ha of jatropha and oil palm plantations. This would require another RM1 billion investment.
Kho said the project was expected to create export revenue of more than RM800 million annually, as all the renewable energy produced would be exported to Japan. In the second phase, Carbon Capital would consider selling the biodiesel, biogas and biomass products to the local market.
He said the jatropha and oil palm plantations would mitigate the effect of rising crude palm oil prices, as Carbon Capital and its Japanese counterpart would not have to rely on third-party supply of feedstock, he added.
The JV would develop alternative biofuel feedstock, such as palm oil, to mitigate investment risks of the jatropha plantation, where the yields and economics were not yet well-established.
CDM is an arrangement under the Kyoto protocol which allows industrialised countries with a greenhouse gas reduction commitment to invest in projects that reduce emissions in developing countries instead of undertaking expensive emission reductions in their own countries.
Jatropha is a plant that can grow in almost all types of soil, and its oil can be processed to produce a high-quality biodiesel, while the residue can be processed into biomass to power electricity plants.
The biodiesel plant would be capable of utilising multi-feedstock of crude palm oil (CPO) and/or crude jatropha oil, and was designed to take into account future expansion of the production of other biofuels.
DPS Resources Bhd recently entered into a memorandum of understanding (MoU) to carry out research and development (R&D) on the cultivation of jatropha plants for biofuel production on a joint-venture (JV) basis with a Chinese company.
OSK Research has projected that the JV company would have an annual turnover for jatropha oil and by-products of RM720 million and RM360 million respectively, with net profit margin estimated at 35% to 40%.
The management indicated that DPS would hold 60% of the JV, said OSK Research. Assuming the ratio, this would increase DPS’ revenue by approximately RM650 million, which translated into an additional net profit of RM227 million per year, it added.
However, the research house said that it did not factor this into its forecasts as the venture was still in its infancy stage and it would take at least 10 years to achieve a full planting land. “The proposed investment is estimated at RM270 million, to be expended over the next 10 years, so as to achieve 66,343ha of planting land and 300,000 tonnes of biofuel production capacity per year,” it added.
“While its diversification into the biofuel business may be lauded given that the jatropha is seen as one of the best candidates for future biodiesel production, we remain conservative on this exercise as it is an unproven venture and DPS does not have any prior experience in the cultivation of the jatropha plant,” OSK Research said in maintaining its neutral call on DPS with a target price of 31 sen, pending further details.
DPS recently announced that its board had approved the MoU signed with Hainan LVBO Industry and Commerce Company Ltd (HLICC) to carry out R&D on the cultivation of jatropha plants for biofuel production on a joint-venture basis.
HLICC has been conducting research on the cultivation of jatropha trees for biofuel production for six years and has a 12.3ha research centre in Hai Kou, China.
According to DPS’ announcement to Bursa on the JV, HLICC was currently researching a new species of jatropha trees which yield higher levels of oil content, toxicity and oil extraction rate.
DPS closed unchanged at 30.5 sen yesterday with 61,000 shares traded.
13-02-2008: Carbon Capital Corp, Japan firm to invest RM2b in SCORE
by Ellina Badri
PETALING JAYA: Clean development mechanism (CDM) services provider, Carbon Capital Corporation Sdn Bhd is teaming up with Japan Carbon Mercantile Co Ltd (JCM) to undertake renewable energy projects worth RM2 billion.
Carbon Capital group managing director, William Kho said the two-phase project was part of the Sarawak Corridor of Renewable Energy (SCORE) initiative. The parties would jointly fund the project on 51:49 basis, he told The Edge Financial Daily.
“We are targeting to kick off the first phase in the middle of this year and are now negotiating with the state government for the land for the project,” Kho said.
On Monday, the two companies signed a memorandum of understanding (MoU) in Kuching for phase one of their programme which would require US$300 million or about RM1 billion, and be developed over five years.
The projects included developing a multi-feedstock biodiesel plant with an annual capacity of about 240,000 tonnes a year, and bulking facilities in Tanjung Manis, Sarawak.
The MoU would also see the JV developing 100,000 ha of jatropha and oil palm plantations, and potential biogas or biomass renewable energy projects under CDM programmes in Sarawak.
The second phase would involve increasing the capacity of the biodiesel plants to 500,000 tonnes a year and the development of another 100,000 ha of jatropha and oil palm plantations. This would require another RM1 billion investment.
Kho said the project was expected to create export revenue of more than RM800 million annually, as all the renewable energy produced would be exported to Japan. In the second phase, Carbon Capital would consider selling the biodiesel, biogas and biomass products to the local market.
He said the jatropha and oil palm plantations would mitigate the effect of rising crude palm oil prices, as Carbon Capital and its Japanese counterpart would not have to rely on third-party supply of feedstock, he added.
The JV would develop alternative biofuel feedstock, such as palm oil, to mitigate investment risks of the jatropha plantation, where the yields and economics were not yet well-established.
CDM is an arrangement under the Kyoto protocol which allows industrialised countries with a greenhouse gas reduction commitment to invest in projects that reduce emissions in developing countries instead of undertaking expensive emission reductions in their own countries.
Jatropha is a plant that can grow in almost all types of soil, and its oil can be processed to produce a high-quality biodiesel, while the residue can be processed into biomass to power electricity plants.
The biodiesel plant would be capable of utilising multi-feedstock of crude palm oil (CPO) and/or crude jatropha oil, and was designed to take into account future expansion of the production of other biofuels.
26 May 2008
25 May 2008
22 May 2008 Getting to the root of a windfall tax
The news
Windfall tax to help rein in inflation?
Malaysia may impose a windfall tax on industries least affected by inflation to help curb price pressures, Domestic Trade Minister Datuk Shahrir Samad said, as annual inflation climbed to a 15-month high in April. "One of the proposals that we have considered is to impose excess profit tax or windfall tax," he added. "The concept is to make sure that there is a fair distribution from groups whose incomes are not directly affected because of inflation." The minister declined to name which industries would be affected by the proposal."Whoever feels that they have a windfall, they will be taxed. It's part of the antiinflation approach that we have taken.
Additional tax to fund subsidies and development.
The minister said that such additional tax income would allow the government to maintain its development agenda without making a big cut to its subsidies for basic items, which is key to curbing runaway prices. "We want to ensure that government revenue will continue growing and its expenditure could still be channelled to subsidies. Also, we need extra income to fund developments," he added.
Timeline.
Shahrir said the government planned to unveil its blueprint to reform fuel subsidies by the end of this year. The government has estimated that subsidies for petrol and gas will rise to RM45bn in 2008, putting an unsustainable strain on its budget. "I would prefer more subsidies for food. As for subsidies for petrol, they must be better managed so that there is less leakage," Shahrir said.
Potential changes in palm oil taxes.
Shahrir said an anti-inflation committee chaired by the prime minister may also announce a reform to a windfall tax imposed on the palm oil sector to deal with complaints that the industry is overtaxed. He added that the ceiling prices on cooking oil will remain but the tax structure on oil palm planters will become "simpler and fair". He acknowledged that oil palm estate owners are complaining about heavy taxes. The planters are paying a few types of cess to the Malaysian Palm Oil Board and sales tax to the state governments of Sabah and Sarawak," Shahrir said. “There will be a new structure. The preference is that there should be lesser number or types of cess payment but a better one, so we can make it simpler and fairer," he said. However, it does not mean that they will pay less. The government has been subsidising cooking oil makers since last May by collecting a cess payment from big palm oil companies.
Comments
Planters may be hit.
The palm oil sector certainly falls under the category of industries that are least affected by inflation as the rise in CPO price has so far more than offset the increase in production costs stemming from higher fertiliser and operating costs. Furthermore, the listed planters have been reporting record earnings in the current results season.
History of windfall tax on planters.
If the government does impose a windfall tax on the planters, it will not be the first such tax. The 1999 Budget proposed a windfall tax of up to RM50 per tonne when CPO price exceeded RM2,000 per tonne. The windfall tax took effect on 1 Jan 1999 but was scrapped when CPO price went below RM2,000.
Figure 1: Previous windfall tax on crude palm oil and crude palm kernel oil
Price range (RM per tonne) Rate of levy (RM per tonne)
less than RM2,000 Nil
RM2,000 - RM2,050 The difference between the selling price
RM2,050 and above RM50
Not surprised by this news.
We are not surprised by the news of a possible tax. In our 11 Mar plantation report, we underscored the risks of potential additional taxes on planters if the government delays price increases for certain controlled items. In the same note, we lowered our P/E targets for Malaysian planters to account for this risk. However, whether it will be a flat or progressive windfall tax scheme and the potential quantum that the government is considering are unclear.
Windfall tax offset by lower cess collection?
We also believe that there is a high likelihood that the windfall tax may be introduced to offset partially or replace the current cooking oil cess collection scheme. Our belief that the cess may be lowered or modified soon is premised on the following recent newsflows: (1) a statement from the minister that the prime minister is working to reform the cess following complaints that the industry is overtaxed; (2) news that the palm oil industry is pushing hard for the removal of the cess, as highlighted in our 26 Mar sector report; and (3) a comment by Datuk Yong Teck Lee, former Chief Minister of Sabah and the president of The Sabah Progressive Party (SPP), a component party of Barisan Nasional, that one of the issues that they would like to see the federal government resolve is unfair taxes such as the cooking oil subsidy scheme, “an imprudent extension of federal laws to Sabah that are costly to the state”. He added that since the federal government pays for the fuel and rice subsidy, it is only right that it also pays for the cooking oil subsidy.
Potential changes to cess.
From our recent conversation with planters, we gathered that the suggestions for cess scheme modification include raising the current benchmark CPO price of RM1,500 per tonne used in calculating the cess collection. The Malaysian Palm Oil Board (MPOB) currently collects a special cooking oil cess of 2 sen per tonne of fresh fruit bunches for every RM1 per tonne increase in CPO price, as long as the price stays above RM1,500 a tonne. At current spot CPO price of RM3,580 per tonne, this is equivalent to a cess collection of around RM208 for every tonne of CPO produced or around 6% of the selling price. The formula may be modified, as suggested by the planters, to reduce cess collection and offset this through the introduction of a windfall tax. On top of this, the planters with estates based in Sabah and Sarawak pay 7.5% and 5% sales tax on CPO, respectively.
Valuation and recommendation
Potential impact on planters.
Taking into account the recent calls for the government to ease the tax burden on planters and the government’s need to raise funds for development and rising subsidy costs, we are of the view that the government may not significantly burden the planters with higher or additional taxes. Instead, we think that it may reassess the cooking oil subsidy, potentially reducing or replacing this tax with a windfall tax. Best-case scenario would be status quo for the overall tax burden on planters. Worst case, it could mirror Indonesia’s export tax, which is currently equivalent to 15% of selling price.
For Sabah planters, the current total tax burden of 6% on cess and 7.5% on Sabah export tax is only 1.5% (RM54 per tonne at current CPO price), which is less than the 15% export tax imposed on Indonesian planters. We also note that planters with estates in Peninsular Malaysia are currently exempted from state sales tax. If these are standardised by the federal government through the introduction of additional taxes on estates in Peninsular Malaysia and Sarawak, the negative impact on affected players like Sime Darby and KL Kepong will be more as their total planted oil palm estates are concentrated in Peninsular Malaysia.
What if a RM50 per tonne windfall tax is imposed?
We have undertaken a sensitivity analysis of the EPS impact of every RM50 per tonne windfall tax levy for all the planters we track, assuming no change in the cooking oil scheme. Our analysis shows that pure planters and those that have sold forward their crops would be hit most. Overall, the potential dilution of our FY09-10 EPS forecasts is 1-2.5% (see Figure 2). Hap Seng Plantation would be most affected as it is a pure upstream palm oil player while IOI Corp and Sime Darby would be least affected as they would be cushioned by downstream assets and non-plantation divisions. We also estimate that the federal government stands to collect net tax revenue of around RM600m, after deducting the loss in corporate tax collection from the planters and assuming a RM50 per tonne tax on CPO and MPOB’s output projection of 16.2m tonnes of CPO in 2008. Maintain OVERWEIGHT call. The news may weaken sentiment on Malaysian plantation stocks until the market gets more clarity on the new tax regime. We retain our OVERWEIGHT call on the sector as we do not expect the planters to be hit badly by the windfall tax assuming that the quantum is around the previous windfall tax of RM50. IOI Corp remains our top pick among the big-cap planters. Key re-rating catalysts for the sector are higher CPO price, rising oil prices and potential supply shortfall in key planting areas due to adverse weather conditions.
Figure 2: Impact of a RM50 per tonne windfall tax levy on FY09/10 EPS of planters
HSP 2.5%
Asiatic 2.2%
KLK 2.1%
IOI 1.1%
Sime 1.0%
filed: 22may.pdf
Windfall tax to help rein in inflation?
Malaysia may impose a windfall tax on industries least affected by inflation to help curb price pressures, Domestic Trade Minister Datuk Shahrir Samad said, as annual inflation climbed to a 15-month high in April. "One of the proposals that we have considered is to impose excess profit tax or windfall tax," he added. "The concept is to make sure that there is a fair distribution from groups whose incomes are not directly affected because of inflation." The minister declined to name which industries would be affected by the proposal."Whoever feels that they have a windfall, they will be taxed. It's part of the antiinflation approach that we have taken.
Additional tax to fund subsidies and development.
The minister said that such additional tax income would allow the government to maintain its development agenda without making a big cut to its subsidies for basic items, which is key to curbing runaway prices. "We want to ensure that government revenue will continue growing and its expenditure could still be channelled to subsidies. Also, we need extra income to fund developments," he added.
Timeline.
Shahrir said the government planned to unveil its blueprint to reform fuel subsidies by the end of this year. The government has estimated that subsidies for petrol and gas will rise to RM45bn in 2008, putting an unsustainable strain on its budget. "I would prefer more subsidies for food. As for subsidies for petrol, they must be better managed so that there is less leakage," Shahrir said.
Potential changes in palm oil taxes.
Shahrir said an anti-inflation committee chaired by the prime minister may also announce a reform to a windfall tax imposed on the palm oil sector to deal with complaints that the industry is overtaxed. He added that the ceiling prices on cooking oil will remain but the tax structure on oil palm planters will become "simpler and fair". He acknowledged that oil palm estate owners are complaining about heavy taxes. The planters are paying a few types of cess to the Malaysian Palm Oil Board and sales tax to the state governments of Sabah and Sarawak," Shahrir said. “There will be a new structure. The preference is that there should be lesser number or types of cess payment but a better one, so we can make it simpler and fairer," he said. However, it does not mean that they will pay less. The government has been subsidising cooking oil makers since last May by collecting a cess payment from big palm oil companies.
Comments
Planters may be hit.
The palm oil sector certainly falls under the category of industries that are least affected by inflation as the rise in CPO price has so far more than offset the increase in production costs stemming from higher fertiliser and operating costs. Furthermore, the listed planters have been reporting record earnings in the current results season.
History of windfall tax on planters.
If the government does impose a windfall tax on the planters, it will not be the first such tax. The 1999 Budget proposed a windfall tax of up to RM50 per tonne when CPO price exceeded RM2,000 per tonne. The windfall tax took effect on 1 Jan 1999 but was scrapped when CPO price went below RM2,000.
Figure 1: Previous windfall tax on crude palm oil and crude palm kernel oil
Price range (RM per tonne) Rate of levy (RM per tonne)
less than RM2,000 Nil
RM2,000 - RM2,050 The difference between the selling price
RM2,050 and above RM50
Not surprised by this news.
We are not surprised by the news of a possible tax. In our 11 Mar plantation report, we underscored the risks of potential additional taxes on planters if the government delays price increases for certain controlled items. In the same note, we lowered our P/E targets for Malaysian planters to account for this risk. However, whether it will be a flat or progressive windfall tax scheme and the potential quantum that the government is considering are unclear.
Windfall tax offset by lower cess collection?
We also believe that there is a high likelihood that the windfall tax may be introduced to offset partially or replace the current cooking oil cess collection scheme. Our belief that the cess may be lowered or modified soon is premised on the following recent newsflows: (1) a statement from the minister that the prime minister is working to reform the cess following complaints that the industry is overtaxed; (2) news that the palm oil industry is pushing hard for the removal of the cess, as highlighted in our 26 Mar sector report; and (3) a comment by Datuk Yong Teck Lee, former Chief Minister of Sabah and the president of The Sabah Progressive Party (SPP), a component party of Barisan Nasional, that one of the issues that they would like to see the federal government resolve is unfair taxes such as the cooking oil subsidy scheme, “an imprudent extension of federal laws to Sabah that are costly to the state”. He added that since the federal government pays for the fuel and rice subsidy, it is only right that it also pays for the cooking oil subsidy.
Potential changes to cess.
From our recent conversation with planters, we gathered that the suggestions for cess scheme modification include raising the current benchmark CPO price of RM1,500 per tonne used in calculating the cess collection. The Malaysian Palm Oil Board (MPOB) currently collects a special cooking oil cess of 2 sen per tonne of fresh fruit bunches for every RM1 per tonne increase in CPO price, as long as the price stays above RM1,500 a tonne. At current spot CPO price of RM3,580 per tonne, this is equivalent to a cess collection of around RM208 for every tonne of CPO produced or around 6% of the selling price. The formula may be modified, as suggested by the planters, to reduce cess collection and offset this through the introduction of a windfall tax. On top of this, the planters with estates based in Sabah and Sarawak pay 7.5% and 5% sales tax on CPO, respectively.
Valuation and recommendation
Potential impact on planters.
Taking into account the recent calls for the government to ease the tax burden on planters and the government’s need to raise funds for development and rising subsidy costs, we are of the view that the government may not significantly burden the planters with higher or additional taxes. Instead, we think that it may reassess the cooking oil subsidy, potentially reducing or replacing this tax with a windfall tax. Best-case scenario would be status quo for the overall tax burden on planters. Worst case, it could mirror Indonesia’s export tax, which is currently equivalent to 15% of selling price.
For Sabah planters, the current total tax burden of 6% on cess and 7.5% on Sabah export tax is only 1.5% (RM54 per tonne at current CPO price), which is less than the 15% export tax imposed on Indonesian planters. We also note that planters with estates in Peninsular Malaysia are currently exempted from state sales tax. If these are standardised by the federal government through the introduction of additional taxes on estates in Peninsular Malaysia and Sarawak, the negative impact on affected players like Sime Darby and KL Kepong will be more as their total planted oil palm estates are concentrated in Peninsular Malaysia.
What if a RM50 per tonne windfall tax is imposed?
We have undertaken a sensitivity analysis of the EPS impact of every RM50 per tonne windfall tax levy for all the planters we track, assuming no change in the cooking oil scheme. Our analysis shows that pure planters and those that have sold forward their crops would be hit most. Overall, the potential dilution of our FY09-10 EPS forecasts is 1-2.5% (see Figure 2). Hap Seng Plantation would be most affected as it is a pure upstream palm oil player while IOI Corp and Sime Darby would be least affected as they would be cushioned by downstream assets and non-plantation divisions. We also estimate that the federal government stands to collect net tax revenue of around RM600m, after deducting the loss in corporate tax collection from the planters and assuming a RM50 per tonne tax on CPO and MPOB’s output projection of 16.2m tonnes of CPO in 2008. Maintain OVERWEIGHT call. The news may weaken sentiment on Malaysian plantation stocks until the market gets more clarity on the new tax regime. We retain our OVERWEIGHT call on the sector as we do not expect the planters to be hit badly by the windfall tax assuming that the quantum is around the previous windfall tax of RM50. IOI Corp remains our top pick among the big-cap planters. Key re-rating catalysts for the sector are higher CPO price, rising oil prices and potential supply shortfall in key planting areas due to adverse weather conditions.
Figure 2: Impact of a RM50 per tonne windfall tax levy on FY09/10 EPS of planters
HSP 2.5%
Asiatic 2.2%
KLK 2.1%
IOI 1.1%
Sime 1.0%
filed: 22may.pdf
23 May 2008
7 May 2007 Not unduly taxing
please consider the date of publish, the figure below may not true.
请参考报告日期，以下数据可能错误。
Govt to impose cess on palm millers
On Sunday, the papers quoted Minister of Plantation Industries and Commodities Datuk Peter Chin Fah Kui as saying that effective 1 June 2007, the government will impose cess on palm oil millers, a method used in the past to offset price differences when olein prices soared beyond RM1,700 per tonne. The government is reviewing the implementation of the cooking oil price stabilisation scheme to ensure that the ceiling price and supply of cooking oil are sustained. Smallholders will be exempted. According to the minister, the cess will only be imposed on estates and not smallholders. The ministry is targeting a cess collection of RM45m a month.
Ceiling price of cooking oil to be maintained. Chin said although CPO prices had soared, the government would maintain the ceiling price of cooking oil which had been enforced since 1997 by ensuring an average supply of 50,000 tonnes of palmbased cooking oil a month for the local market.
Govt to subsidise refiners’ losses. To tackle the recent price increase in cooking oil by some suppliers, the government will compensate or subsidise losses incurred by palm oil-based cooking oil suppliers arising from the difference between the market price of olein and that fixed by the government.
This news follows a Starbiz report on Saturday that the government may impose a windfall tax or a cooking oil price stabilisation tax on oil palm plantation companies in the near term as part of the efforts to subsidise the escalating cost of producing palm oil-based cooking oil.
Two potential scenarios. Industry consultant M.R. Chandran said there were two likely scenarios – a windfall tax or a windfall tax together with a cooking oil price stabilisation tax which had been slapped on plantation companies in the late 1990s. In 1997, the government imposed a cooking oil price stabilisation tax on plantation companies which were required to pay 50 sen for every RM10 increase in CPO price above the base level of RM1,450 per tonne. A year later, planters were subjected to a windfall tax of RM50 whenever CPO price topped RM2,000 per tonne.
Chandran, a former Malaysian Palm Oil Association chief executive, said: “With CPO currently trading at RM2,200 to RM2,300 per tonne, I believe the government will just consider a windfall tax on palm oil plantation players.”
figure 1
Comments
Not a surprise. This news does not come as a surprise to us as we had highlighted in last Friday’s daily that the government may tax palm producers to resolve the issue of cooking oil shortages.
Cess is part of cooking oil stabilisation scheme. It is not clear if a separate windfall tax will be imposed. We think the cess that the minister is referring to comes under the cooking oil stabilisation fund scheme. This scheme has been implemented twice before in 1997 and 2004 when palm oil price went above RM1,700 per tonne.
Palm oil producers had to pay 50 sen cess for every RM10 increase above RM1,450 a tonne for CPO. If the same rate of cess is imposed this time around, palm oil producers may have to pay RM38 tax per tonne based on the RM2,210 average CPO price achieved in Apr 07. This works out to only 1.7% of the CPO price.
What about windfall profit levy? This tax was proposed under the 1999 Budget to give the government more revenue. Essentially, planters were taxed a maximum of RM50 per tonne when CPO price exceeded RM2,000 per tonne (for more details, please refer to Figure 3). The windfall tax took effect on 1 Jan 1999 but was later scrapped when CPO price went below RM2,000.
The likely scenario. We believe the government will stop at introducing the cess rate and will not impose a windfall tax given that its aim is to help subsidise cooking oil in the country, rather than raise additional revenue for the government. We believe the proceeds from the cess rate will be sufficient to keep cooking oil prices at the current controlled price, assuming the government imposes the same rate as under the previous cooking oil stabilisation scheme. At the current CPO price of RM2,300 per tonne, the government will be able to collect around RM42.50 of cess for every tonne of CPO produced. This translates into around RM680m of cess revenue per annum or RM56m per month assuming the country produces 16m tonnes of CPO in 2007. This should more than meet the ministry’s plan of collecting around RM45m of cess a month, even if we exclude smallholders which own around 10% of total planted oil palm area in the country.
Figure 2
Figure3
Valuation and recommendation
Potential earnings impact. This news is negative for palm oil producers as they will bear the full brunt of the tax. Based on our current average CPO price forecasts of RM2,030 for 2007 and RM2,100 for 2008, we estimate that it will translate into additional costs of RM29 per tonne in 2007 and RM32.5 per tonne in 2008, trimming 1-2% off our FY08 EPS forecasts for the plantation companies under our coverage.
Asiatic is most affected as it is a pure planter and derives all of its plantation earnings from Malaysia. KL Kepong is less sensitive to the tax as its Indonesian operations will not be affected by it. IOI Corp’s earnings are also less affected by the cess as part of its earnings comes from non-plantation businesses.
Upgrade in CPO price to offset the impact of higher palm tax. We are keeping our earnings forecasts until the government makes a formal announcement on the cess rate, possibly as early as this week. While this news may put a damper on the current bullish sentiment on plantation companies, we maintain our OVERWEIGHT call on the sector as the potential earnings impact is not expected to be significant. We expect the upbeat sentiment on CPO price to override any negative impact from the new tax. Furthermore, we are in the midst of reviewing our CPO price forecasts and expect the potential upgrade in price to offset the impact of cess. Intact are our OUTPERFORM ratings on KL Kepong and Asiatic and NEUTRAL call on IOI Corp.
figure 4
filed:Plantation update - Not unduly taxing.pdf
请参考报告日期，以下数据可能错误。
Govt to impose cess on palm millers
On Sunday, the papers quoted Minister of Plantation Industries and Commodities Datuk Peter Chin Fah Kui as saying that effective 1 June 2007, the government will impose cess on palm oil millers, a method used in the past to offset price differences when olein prices soared beyond RM1,700 per tonne. The government is reviewing the implementation of the cooking oil price stabilisation scheme to ensure that the ceiling price and supply of cooking oil are sustained. Smallholders will be exempted. According to the minister, the cess will only be imposed on estates and not smallholders. The ministry is targeting a cess collection of RM45m a month.
Ceiling price of cooking oil to be maintained. Chin said although CPO prices had soared, the government would maintain the ceiling price of cooking oil which had been enforced since 1997 by ensuring an average supply of 50,000 tonnes of palmbased cooking oil a month for the local market.
Govt to subsidise refiners’ losses. To tackle the recent price increase in cooking oil by some suppliers, the government will compensate or subsidise losses incurred by palm oil-based cooking oil suppliers arising from the difference between the market price of olein and that fixed by the government.
This news follows a Starbiz report on Saturday that the government may impose a windfall tax or a cooking oil price stabilisation tax on oil palm plantation companies in the near term as part of the efforts to subsidise the escalating cost of producing palm oil-based cooking oil.
Two potential scenarios. Industry consultant M.R. Chandran said there were two likely scenarios – a windfall tax or a windfall tax together with a cooking oil price stabilisation tax which had been slapped on plantation companies in the late 1990s. In 1997, the government imposed a cooking oil price stabilisation tax on plantation companies which were required to pay 50 sen for every RM10 increase in CPO price above the base level of RM1,450 per tonne. A year later, planters were subjected to a windfall tax of RM50 whenever CPO price topped RM2,000 per tonne.
Chandran, a former Malaysian Palm Oil Association chief executive, said: “With CPO currently trading at RM2,200 to RM2,300 per tonne, I believe the government will just consider a windfall tax on palm oil plantation players.”
figure 1
Comments
Not a surprise. This news does not come as a surprise to us as we had highlighted in last Friday’s daily that the government may tax palm producers to resolve the issue of cooking oil shortages.
Cess is part of cooking oil stabilisation scheme. It is not clear if a separate windfall tax will be imposed. We think the cess that the minister is referring to comes under the cooking oil stabilisation fund scheme. This scheme has been implemented twice before in 1997 and 2004 when palm oil price went above RM1,700 per tonne.
Palm oil producers had to pay 50 sen cess for every RM10 increase above RM1,450 a tonne for CPO. If the same rate of cess is imposed this time around, palm oil producers may have to pay RM38 tax per tonne based on the RM2,210 average CPO price achieved in Apr 07. This works out to only 1.7% of the CPO price.
What about windfall profit levy? This tax was proposed under the 1999 Budget to give the government more revenue. Essentially, planters were taxed a maximum of RM50 per tonne when CPO price exceeded RM2,000 per tonne (for more details, please refer to Figure 3). The windfall tax took effect on 1 Jan 1999 but was later scrapped when CPO price went below RM2,000.
The likely scenario. We believe the government will stop at introducing the cess rate and will not impose a windfall tax given that its aim is to help subsidise cooking oil in the country, rather than raise additional revenue for the government. We believe the proceeds from the cess rate will be sufficient to keep cooking oil prices at the current controlled price, assuming the government imposes the same rate as under the previous cooking oil stabilisation scheme. At the current CPO price of RM2,300 per tonne, the government will be able to collect around RM42.50 of cess for every tonne of CPO produced. This translates into around RM680m of cess revenue per annum or RM56m per month assuming the country produces 16m tonnes of CPO in 2007. This should more than meet the ministry’s plan of collecting around RM45m of cess a month, even if we exclude smallholders which own around 10% of total planted oil palm area in the country.
Figure 2
Figure3
Valuation and recommendation
Potential earnings impact. This news is negative for palm oil producers as they will bear the full brunt of the tax. Based on our current average CPO price forecasts of RM2,030 for 2007 and RM2,100 for 2008, we estimate that it will translate into additional costs of RM29 per tonne in 2007 and RM32.5 per tonne in 2008, trimming 1-2% off our FY08 EPS forecasts for the plantation companies under our coverage.
Asiatic is most affected as it is a pure planter and derives all of its plantation earnings from Malaysia. KL Kepong is less sensitive to the tax as its Indonesian operations will not be affected by it. IOI Corp’s earnings are also less affected by the cess as part of its earnings comes from non-plantation businesses.
Upgrade in CPO price to offset the impact of higher palm tax. We are keeping our earnings forecasts until the government makes a formal announcement on the cess rate, possibly as early as this week. While this news may put a damper on the current bullish sentiment on plantation companies, we maintain our OVERWEIGHT call on the sector as the potential earnings impact is not expected to be significant. We expect the upbeat sentiment on CPO price to override any negative impact from the new tax. Furthermore, we are in the midst of reviewing our CPO price forecasts and expect the potential upgrade in price to offset the impact of cess. Intact are our OUTPERFORM ratings on KL Kepong and Asiatic and NEUTRAL call on IOI Corp.
figure 4
filed:Plantation update - Not unduly taxing.pdf
暴利稅 东方新闻网
最近许多种植公司刻意把存货堆起，不写出亮丽的季报，是什么原因？拿督沙里爾 siapa dia? (是谁？)
不伦不类，乍看之下应是好消息，有检讨就有进步。但他们提到通货膨胀的问题，却又在暗示其他。
政府或徵收企業暴利稅 種植業料首當其衝
不伦不类，乍看之下应是好消息，有检讨就有进步。但他们提到通货膨胀的问题，却又在暗示其他。
政府或徵收企業暴利稅 種植業料首當其衝
報導 - 李駿宏
（吉隆坡22日訊）大馬政府可能對特定領域徵收暴利稅，以對抗物價上漲的壓力，分析員認為，種植業者可能受到最大影響。
國內貿消部部長拿督沙里爾表示，因為通脹率已經上揚到15個月以來的最高水平，因此，他將會建議大馬政府對一些領域徵收暴利稅。
他表示，透過上述的暴利稅，政府能夠避開大幅削減補貼的情況，而額外的稅收收入，能夠讓政府維持他們的發展議程。無論如何，沙里爾不願意透露，到底哪些領域將會被徵收暴利稅。
沙里爾也表示，由首相主持的反通脹委員會，也將會宣佈重組棕油領域的暴利稅，因為很多人認為，整個棕油領域已經被超額徵稅。他補充，食用油的頂限價格仍會存在，但是，棕油種植商的稅率結構，將會是「簡單及合理」的。
業者抗議超額徵稅
事實上，聯昌國際投行分析員認為，在目前的通貨膨脹情況下，工業領域下的棕油行業，肯定會受到負面影響，因為原棕油價格提高，更多包括肥料及營運成本在內的生產成本所抵銷。
無論如何，就算政府對棕油領域徵收暴利稅，分析員也不會太過驚訝。該分析員表示，政府並不是第一次對種植業者開徵暴利稅。
在1999年預算案中，政府就已經引入暴利稅，稅率結構為當原棕油價格超過2000令吉，每噸將徵收50令吉的暴利稅。
另一方面，聯昌國際投行分析員相信，政府引入暴利稅后所帶來的效益，有很大的可能將會部份抵銷，或者取代現有的食用油稅收策略。
他們相信，食油稅收計劃將會很快被調低，或者是修改。該分析員表示，他們之所以這么認為，主要是整個行業抗議超額徵稅后，首相將會重組稅收、棕油領域大力要求取消食油稅收，同時，沙巴州前首席部長拿督楊德利，要求聯邦政府取消不合理的稅收，如食油稅。
考量所有因素后，聯昌國際投行認為，政府不會調高或提出新的稅率，因為這可能會對棕油種植業者帶來顯著的負面影響。
他認為，最佳的情境，是政府維持目前對棕油種植業者的整體稅收結構。最壞的情況，則是像印尼徵收出口稅那樣，開徵出口稅。
該分析員仍維持對種植領域「加碼」的投資建議。
21 May 2008
hap seng plantation quarter report
本季的成绩，创下惊人跌幅，原因有4，亦即
1.为了配合31/12 ending fiscal year，本季只记两月份；
2.雨季影响收成；
3.8000公顿cpo的存货增加；
4.一如既往低于市价的cpo卖价(原本就预料的)。
Resulting from the change in financial year end as mentioned in Part A Note 2, the current quarter results was for the two months period ended 31 March 2008.
For the current period under review, the Group recorded revenue of RM45.8 million on Crude Palm Oil (CPO) sales volume of 13,252 tonnes and Palm Kernel (PK) sales volume of 4,906 tonnes. Average selling price of CPO and PK achieved were RM2,431 and RM1,995 per tonne respectively.
Generally, Group’s revenue was affected by lower CPO sales volume due to lower production of Fresh Fruit Bunches (FFB) attributable to the seasonal yield trend and changes in cropping pattern as well as delay in deliveries of CPO resulting from the wet weather conditions during the period under review. Consequent to the delay in deliveries of CPO, closing stock of CPO as at 31 March 2008 has increased by approximately 8,000 tonnes as compared to 31 January 2008.
Overall. the Group’s Profit before tax and Profit after tax for the current period was RM17.6 million and RM13.2 million respectively.
Earnings per share (EPS) attributable to the shareholders of the Company for the current period was 1.65 sen.
Group profit before tax for the current quarter at RM17.6 million was 76% lower than the preceding quarter of RM73.5 million. The lower results were mainly attributable to only two months reporting in the current quarter, lower FFB production attributable to the seasonal yield trend and changes in cropping pattern, and lower CPO sales volume due to delay in deliveries resulting from the adverse weather conditions.
对于第四点，hsplant的平均卖价为2431，目前为止的资料为swkplnt报3033，bstead报3029。可见forward sales的杀伤力。
至于hsplant少计算了多少盈利呢？这可以从存货的上升计算。前后二月存货增加了RM5758000，如果换算成税前盈利，应该是8000*(2431-720) = RM13688000。
平均成本是RM720，已经够低了，所以不可能连pk也卖不出，pk不加进。
不肯定此项预测，会不会遭受forward sales鬼合约扭曲？
20080520 research
filed: KulimNew Britain buys Ramu Agri osk.pdf ,080520-kulim.pdf
New Britain buys Ramu Agri Industries
Kulim’s 50.5% subsidiary New Britain Palm Oil, which is listed on the London Stock Exchange, made a US$43.8m cash offer for all of Ramu Agri Industries Ltd shares which it does not own. In addition, Ramu has net debt of US$13.7m. Ramu is listed on the Papua New Guinea’s Port Moresby Exchange and holds long term leases of approximately 30,000 hectares in Ramu Valley, Papua New Guinea, of which New Britain believes 16,000 hectares has the potential of being developed into oil palm plantation.
Existingly, New Britain holds 19.45% stake in Ramu Industries. The acquisition will be funded from New Britian’s cash reserve.
COMMENTS
Purchase price inexpensive. Including Ramu’s net debt of US$13.7m, the purchase price comes to US$57.5m or RM184m (assuming US$1 = RM3.20). Attaching no value to its 8,000 hectares of sugar cane plantation and 16k heads of cattles and knocking off unplanted area of 16,000 at RM5 per hectare and mill at RM25m, the effective price for the 4,500 hectares of planted area is RM35.3k per hectare. This is quite close with the price IOI Corp recently paid in an acquisition for plantation asset in Sarawak. In terms of yield however, we believe its yield will be substantially higher than.
Consistent with company’s stated objective. New Britain targets to double its planted area in 7 – 8 years. The acquisition will bring the company substantially nearer to its objective.
News may not excite Kulim’s stock price. While New Britain’s stock price rose by 10% on Friday following the release of the acquisition news, Kulim’s stock price may not act the same way, At the moment, New Britain’s market cap stands at 817.6m sterling pound. Kulim’s 50.5% stake is thus worth RM2.6bn compared to Kulim’s own market cap of just under RM2.6bn, making Kulim’s stock clearly undervalued. However, we do not think New Britain’s acquisition news will act as a stock price catalyst for Kulim. This is because Kulim has been undervalued for some time vis-à-vis New Britain’s value.
New Britain is thus clearly not what is holding back Kulim’s stock price. Rather, we believe its Malaysia plantation holds the key. Once the market is convinced that its Malaysia plantation has turned profitable and no longer bogged down by its forward sale, the stock price should perform better. We remain convinced that Kulim will be a sector outperformer this year. Investors should look out for Kulim’s quarterly results to be released at the end of the month.
Summary
Kulim announced that its 51%-subsidiary NBPOL has offered to privatize Ramu Agri-Industries for USD44m. We think the deal is cheap (normalized 9x PE, vacant land value of USD1,800/ha) and transformative. Kulim remains our top pick in the plantation sector: 1) the stock trades at a FY08 PE of 8x vs. 14x for mid-cap peers; (2) Room for corporate action gains, given lumpy low-performing assets (eg. QSR, Johor development land). We are neutral on the plantation sector, and advocate switching from IOI/KLK to small/mid-cap planters such as Kulim, which offer better value/yield. Given the tight global supply of edible oil and grain, we expect CPO price to stay firm in the next 6 months.
Expanding landbank via acquisition
News: NBPOL in USD44m M&A deal
Kulim’s 51%-subsidiary New Britain Palm Oil (NBPOL) has made an offer to privatize its 20%-associate Ramu Agri Industries (RAI) for USD44m (PGK121m). The offer price of PGK5.00 for RAI is a 12% premium to last week’s PGK4.46/share closing price.
Background: RAI is a sugarcane grower with excess land RAI is listed on the Port Moresby Stock Exchange, and is an agricultural conglomerate currently involved in sugar (FY3/07 production of 32,000mt), palm oil (4,500ha of young mature planted land), beef (25,000 cattle comprising
a 9% PNG market share), cashew (100ha planted). RAI plans to plant palm oil on 30,000ha long-term leased land on the PNG mainland. Based on FY3/06 and FY3/07 net profit of PGK14m and PGK5m, transaction PE is 9-25x. The sharp drop in profit was due to a -30% decline in sugar output, because of crop disease, weather and land disputes. However, RAI’s management was quoted in the press as saying it hopes to restore sugar output through a mix of
restructuring and outsourcing. RAI’s earnings are currently heavily dependent on sugarcane, with CPO playing a small, but growing part.
Analysis: Acquisition is cheap; Long-term strategic value
In our view: (1) By Malaysian standards, the acquisition is cheap, considering PNG’s high FFB yields. Ignoring RAI’s current sugar business, RAI’s M&A valuation of USD55m and 30,000ha vacant land works out to USD1,800/ha, vs. USD3,100/ha in Sarawak (from IOI’s recent transaction). (2) NBPOL can comfortably afford the deal, given Dec07 net cash of USD116m. (3) NBPOL’s potential palm oil landholding will rise from the current 45,000ha to 75,000ha, similar in size to mid-cap Malaysian planters, and providing the company with
critical mass relative to other London-listed plantation stocks.
20 May 2008
趁"高"抛售cepat
经过我们的讨论，Cepat的Corporate Governance可以和任何一个烂股做比较。拜cpo上升所赐，Cepat的财务才可以保持在不崩溃的位置。如果cpo和几年前一样，保持在1500的位置，你说cepat不会中pn吗？
为了不扫投资者的兴，我们本来想把这感想埋葬的(Cepat在本blog中不予考虑)，一直到前几天发生了让股东不愉快的事(虚报盈利)。虽然他们紧随一天作出修补，但他们的举动已经引起我们的注意了。
Profit/(loss) attributable to ordinary equity holders of the parent
14/05/2008
18,906
15/05/2008
14,742
The amendment is in relation to an error in consolidation adjustment for the gain on disposal of jungle land in a subsidiary which should be RM5.4 million instead of RM9.6 million as announced. As such, profit for the current quarter was revised from RM19.48 million to RM15.32 million mainly due to a consolidation adjustment for the gain on disposal of jungle land in a subsidiary amounting to RM4.16 million. This consolidation adjustment relates to the reversal of group land cost arising in the consolidated account. The gain on disposal of jungle land in the subsidiary level remains at RM9.6 million. Overall, there is no impact to the Group’s revenue and gross profit.
衷心期待15/5被套的可以在这个礼拜"解套"。
也许你解了他以后他炒到二元？
不如等在关口被破以后，RM1.5买回去。
是你让我觉得你是炒股。
CWG:MK
为了不扫投资者的兴，我们本来想把这感想埋葬的(Cepat在本blog中不予考虑)，一直到前几天发生了让股东不愉快的事(虚报盈利)。虽然他们紧随一天作出修补，但他们的举动已经引起我们的注意了。
Profit/(loss) attributable to ordinary equity holders of the parent
14/05/2008
18,906
15/05/2008
14,742
The amendment is in relation to an error in consolidation adjustment for the gain on disposal of jungle land in a subsidiary which should be RM5.4 million instead of RM9.6 million as announced. As such, profit for the current quarter was revised from RM19.48 million to RM15.32 million mainly due to a consolidation adjustment for the gain on disposal of jungle land in a subsidiary amounting to RM4.16 million. This consolidation adjustment relates to the reversal of group land cost arising in the consolidated account. The gain on disposal of jungle land in the subsidiary level remains at RM9.6 million. Overall, there is no impact to the Group’s revenue and gross profit.
衷心期待15/5被套的可以在这个礼拜"解套"。
也许你解了他以后他炒到二元？
不如等在关口被破以后，RM1.5买回去。
是你让我觉得你是炒股。
CWG:MK
17 May 2008
NBPOL Admission to trading on the London Stock Exchange
12 December 2007
PRESS ANNOUNCEMENT
NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR THE UNITED STATES
NEW BRITAIN PALM OIL LIMITED
ADMISSION TO TRADING ON THE LONDON STOCK EXCHANGE
New Britain Palm Oil Limited (“NBPOL” or the “Company”), the largest palm oil producer in Australasia, with over 40,000 hectares of planted palm oil plantations, five oil mills, a refinery and a seed production and plant breeding facility, today announces that it has applied to have its ordinary shares listed on the Official List of the UK Listing Authority and to trading on the London Stock Exchange's main market for listed securities ("Admission"). In addition, Kaupthing Singer & Friedlander Capital Markets Limited ("Kaupthing Singer & Friedlander") is carrying out a fully underwritten placing with institutional investors of new and existing ordinary shares of NBPOL (the "Placing").
• Total gross proceeds under the Placing of approximately £88.9 million
• The Placing values NBPOL at approximately £362 million
• NBPOL will raise approximately £62.5 million of proceeds (gross of commissions and expenses) from the issuance of 25 million new ordinary shares in the Placing at a price of 250 pence per share
• NBPOL will use the proceeds primarily for the expansion of its facilities and infrastructure, accelerating its planting programme and for future acquisitions and general corporate purposes. The Directors believe that the Group has the ability to grow its business through the extension of its plantations and that the Group has the potential to double its entire current plantation area within seven to eight years
• Admission is expected to become effective and dealings in NBPOL's ordinary shares (under ticker "NBPO.L") are expected to commence at 08:00 (London time) on 17 December 2007
• Kaupthing Singer & Friedlander is the sole financial adviser, sponsor, underwriter and broker to the Company
Nick Thompson, NBPOL’s Chief Executive Officer, commented:
“There has been a great deal of interest from investors in New Britain Palm Oil Limited which has led to a very successful IPO and another important milestone for the Company with a London Stock Exchange listing. The London listing signifies the start of the next major phase of development of NBPOL as we target the doubling of the Company's current plantation area in seven to eight years. We will also use the proceeds to expand our milling facilities and infrastructure, accelerate the planting programme for existing plantations under development and to further improve our operating efficiencies, whilst at the same time maintaining our historic focus on sustainability.
We believe that our long trading history, scale, market position and long established relationships with our customers, mean we are very well positioned to capitalise on the positive trends we see in the palm oil market. Of particular importance for our business is our focus on sustainability as we believe high quality sustainability credentials are increasingly demanded by our EU customer base. The Directors believe that our historic and continuing focus on sustainability is beginning to differentiate our product, a trend we believe will continue and grow.
We look forward to the continuing success of New Britain Palm Oil Limited for the benefit of our shareholders, customers, employees and other stakeholders.”
Helgi Bergs of Kaupthing Singer & Friedlander, commented:
“Kaupthing is delighted with the very positive response that we have received from the successful marketing of New Britain Palm Oil Limited, especially given the difficult current markets. The successful marketing not only underlines the strengths of the management and business but also the excellent prospects for NBPOL.
New Britain Palm Oil Limited is the first company that Kaupthing has floated on London’s main market since the recent establishment of its UK equity capital markets operations. The successful marketing of the Company benefited from Kaupthing’s excellent reach and distribution across the UK, Nordic region and beyond. We look forward to working closely with the Company as it pursues its growth strategy."
Enquiries:
Fishburn Hedges (Financial PR Adviser)
James Benjamin
Morgan Bone Tel: +44 (0)20 7839 4321
Mob: +44 (0) 7747 113 930
Mob: +44 (0) 7767 622 967
Email: nbpol@fishburn-hedges.co.uk
New Britain Palm Oil Limited
Nick Thompson
Alan Chaytor Tel: +44 (0)20 7839 4321
Kaupthing Singer & Friedlander
Helgi Bergs
Nicholas How Tel: +44 (0)20 3205 5000
Overview of NBPOL
• NBPOL is a large scale industrial producer of palm oil in Australasia, with over 40,000 hectares of planted palm oil plantations, five oil mills, a refinery and a seed production and plant breeding facility. The Directors believe that the Group has the ability to grow its business through the extension of its plantations, with the potential to double its entire current plantation area within seven to eight years
• NBPOL is fully vertically integrated, producing its own seed (which it also sells globally) and plants, cultivating and harvesting its own land, and processing and refining palm oil. It also contracts directly with its end customers in the EU and arranges shipping of its products
• The Company has a 40 year history of growth and has been listed on the Port Moresby Stock Exchange ("POMSoX") since 1999
• NBPOL had audited consolidated revenue of approximately USD115.0m and USD133.8m in the financial years ended 31 December 2005 and 2006 respectively, and profits after tax of approximately USD19.1m and USD47.8m. In the six months to 30 June 2007, NBPOL had turnover of approximately USD105.5 and profits after tax of approximately USD56.7. Compared to the same period in 2006, the first six months of 2007 returned increases of approximately 56 per cent. and 271 per cent. in turnover and profit after tax respectively
• The Company’s main palm oil operations are based in Papua New Guinea ("PNG") and the Solomon Islands. NBPOL is one of the largest private sector employers in PNG and, in 2006, its revenues made up approximately 3.3% of the country's total export value (source: CIA World Factbook)
• The palm oil market is undergoing a period of rapid change with demand from the developing and urbanising Asian economies and the new biofuel industry driving a marked increase in demand for vegetable oil products, including palm oil
• The global price of palm oil has risen in response in part to this marked change in demand, and the Directors of NBPOL believe that there is the potential for these higher prices to continue. Palm oil prices over the 12 months to mid-November 2007 have shown an approximate doubling
• NBPOL has maintained a long association with its major customers, all of which are based in the EU and contract with NBPOL in US Dollars. Due to a long standing treaty between the EU and the African, Caribbean and Pacific group of states (including Papua New Guinea), sales of palm oil products to the EU benefit from certain import duty exemptions, allowing the Company an effective premium on its regular prices to customers in the EU
• NBPOL is managed by a stable management team headed by three UK executive directors. The CEO is 47 and has been with the Company for 23 years
• NBPOL estimates its average cost of production in the financial year ended 31 December 2006 was approximately USD262/tonne of CPO. The spot price for crude palm oil as at 10 December 2007 was $930/tonne based on the CPO market price CIF Rotterdam (source: Reuters)
• NBPOL has some of the world's highest yielding plantations of palm oil, and is currently achieving yields per hectare approximately 19 per cent. above the world average due, in the Directors' opinion, to the favourable natural environment in PNG, high quality genetic material and skilled management
• NBPOL has a high level of control over its entire supply chain, from the control and development of its genetic material, through planting, harvesting, processing and finally contracting with its end customers
• NBPOL has high regard for the importance of its sustainability credentials and is active in proving its performance through its certification to ISO 14001, and its close involvement and support of the Roundtable on Sustainable Palm Oil (“RSPO”) – the RSPO has around 160 members, of which 12 are non-governmental organisations (including WWF and Oxfam). NBPOL’s Head of Research, Dr Simon Lord, is Vice President of the RSPO
• There are significant barriers for would be competitors to enter palm oil production, not least the long lead-in time required to set up new projects – new palm oil supply takes 3-4 years from field planting to commercial harvesting
• Palm oil is a vegetable oil found in a large cross section of consumer foods and chemical products including: processed foods, cooking oils, cosmetics and a variety of chemicals. However, a new market for palm oil has accelerated since 2002, known as the 'biofuel' sector. NBPOL believes that this sector is being driven by governments seeking alternative fuel sources, and burning vegetable oil as fuel is one such form of alternative (non-fossil fuel) energy
-ends-
This announcement which has been prepared by, and is the sole responsibility of, the Directors of New Britain Palm Oil Limited, has been approved for the purposes of section 21 of the Financial Services and Markets Act 2000 by Kaupthing Singer & Friedlander Capital Markets Limited.
This announcement does not constitute a prospectus relating to New Britain Palm Oil Limited and does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares in New Britain Palm Oil Limited in any jurisdiction nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with or act as any inducement to enter into, any contract therefor.
Recipients of this announcement who are considering acquiring ordinary shares in New Britain Palm Oil Limited are reminded that any such acquisition must be made only on the basis of the information contained in the prospectus published by New Britain Palm Oil Limited on 11 December 2007 in connection with the admission of its ordinary shares to the Official List of the Financial Services Authority and to trading on the London Stock Exchange plc's main market for listed securities (the “Prospectus”) which may be different from the information contained in this announcement.
The Prospectus has been filed with the Financial Services Authority (“FSA”). This document will be available for inspection at the FSA's Document Viewing Facility which is situated at
Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E15 5HS
and will be available, free of charge, during normal business hours from the Company's registered office and from the offices of Kaupthing Singer & Friedlander Capital Markets Limited at One Hanover Street, London W1S 1AX and Travers Smith, 10 Snow Hill, London EC1A 2AL until 25 December 2007.
Kaupthing Singer & Friedlander Capital Markets Limited , which is authorised and regulated in the United Kingdom by the Financial Services Authority and is a member of the London Stock Exchange, is acting exclusively for the Company as financial adviser, sponsor and broker and no-one else in connection with the Placing and proposed UK Admission. Kaupthing Singer & Friedlander Capital Markets Limited will not regard any other person as its customer or be responsible to any other person for providing the protections afforded to customers of Kaupthing Singer & Friedlander Capital Markets Limited nor for providing advice in relation to the transactions or arrangements referred to in this announcement.
Pacific Nominees Limited is acting exclusively for the Company and no-one else in connection with the proposed POMSoX Admission. Pacific Nominees will not regard any other person as its customer or be responsible to any other person for providing the protections afforded to customers of Pacific Nominees Limited nor for providing advice in relation to the transactions or arrangements referred to in this announcement.
The ordinary shares in the capital of NBPOL ("Ordinary Shares") have not been, and will not be registered under the United States Securities Act of 1933, as amended (the 'Securities Act') or under the securities legislation of any state of the United States or under applicable laws of any of Canada, Australia, Malaysia, the Republic of South Africa or Japan, and, subject to certain exceptions, may not be offered or sold in the United States or to or for the benefit of US persons (as such term is defined in Regulation S under the Securities Act) or to any national, resident or citizen of any of Canada, Australia, Malaysia, the Republic of South Africa or Japan.
Information contained in this announcement may include 'forward-looking statements'. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding NBPOL's financial position, business strategy, plans and objectives of management for future operations are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of NBPOL to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. NBPOL and Kaupthing Singer & Friedlander expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward looking statements contained in this announcement to reflect any change in NBPOL's expectations with regard thereto, any new information or any change in events, conditions or circumstances on which any such statements are based, unless required to do so by the Financial Services and Markets Act 2000, the Listing Rules of the UK Listing Authority or other applicable laws, regulations or rules.
PRESS ANNOUNCEMENT
NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR THE UNITED STATES
NEW BRITAIN PALM OIL LIMITED
ADMISSION TO TRADING ON THE LONDON STOCK EXCHANGE
New Britain Palm Oil Limited (“NBPOL” or the “Company”), the largest palm oil producer in Australasia, with over 40,000 hectares of planted palm oil plantations, five oil mills, a refinery and a seed production and plant breeding facility, today announces that it has applied to have its ordinary shares listed on the Official List of the UK Listing Authority and to trading on the London Stock Exchange's main market for listed securities ("Admission"). In addition, Kaupthing Singer & Friedlander Capital Markets Limited ("Kaupthing Singer & Friedlander") is carrying out a fully underwritten placing with institutional investors of new and existing ordinary shares of NBPOL (the "Placing").
• Total gross proceeds under the Placing of approximately £88.9 million
• The Placing values NBPOL at approximately £362 million
• NBPOL will raise approximately £62.5 million of proceeds (gross of commissions and expenses) from the issuance of 25 million new ordinary shares in the Placing at a price of 250 pence per share
• NBPOL will use the proceeds primarily for the expansion of its facilities and infrastructure, accelerating its planting programme and for future acquisitions and general corporate purposes. The Directors believe that the Group has the ability to grow its business through the extension of its plantations and that the Group has the potential to double its entire current plantation area within seven to eight years
• Admission is expected to become effective and dealings in NBPOL's ordinary shares (under ticker "NBPO.L") are expected to commence at 08:00 (London time) on 17 December 2007
• Kaupthing Singer & Friedlander is the sole financial adviser, sponsor, underwriter and broker to the Company
Nick Thompson, NBPOL’s Chief Executive Officer, commented:
“There has been a great deal of interest from investors in New Britain Palm Oil Limited which has led to a very successful IPO and another important milestone for the Company with a London Stock Exchange listing. The London listing signifies the start of the next major phase of development of NBPOL as we target the doubling of the Company's current plantation area in seven to eight years. We will also use the proceeds to expand our milling facilities and infrastructure, accelerate the planting programme for existing plantations under development and to further improve our operating efficiencies, whilst at the same time maintaining our historic focus on sustainability.
We believe that our long trading history, scale, market position and long established relationships with our customers, mean we are very well positioned to capitalise on the positive trends we see in the palm oil market. Of particular importance for our business is our focus on sustainability as we believe high quality sustainability credentials are increasingly demanded by our EU customer base. The Directors believe that our historic and continuing focus on sustainability is beginning to differentiate our product, a trend we believe will continue and grow.
We look forward to the continuing success of New Britain Palm Oil Limited for the benefit of our shareholders, customers, employees and other stakeholders.”
Helgi Bergs of Kaupthing Singer & Friedlander, commented:
“Kaupthing is delighted with the very positive response that we have received from the successful marketing of New Britain Palm Oil Limited, especially given the difficult current markets. The successful marketing not only underlines the strengths of the management and business but also the excellent prospects for NBPOL.
New Britain Palm Oil Limited is the first company that Kaupthing has floated on London’s main market since the recent establishment of its UK equity capital markets operations. The successful marketing of the Company benefited from Kaupthing’s excellent reach and distribution across the UK, Nordic region and beyond. We look forward to working closely with the Company as it pursues its growth strategy."
Enquiries:
Fishburn Hedges (Financial PR Adviser)
James Benjamin
Morgan Bone Tel: +44 (0)20 7839 4321
Mob: +44 (0) 7747 113 930
Mob: +44 (0) 7767 622 967
Email: nbpol@fishburn-hedges.co.uk
New Britain Palm Oil Limited
Nick Thompson
Alan Chaytor Tel: +44 (0)20 7839 4321
Kaupthing Singer & Friedlander
Helgi Bergs
Nicholas How Tel: +44 (0)20 3205 5000
Overview of NBPOL
• NBPOL is a large scale industrial producer of palm oil in Australasia, with over 40,000 hectares of planted palm oil plantations, five oil mills, a refinery and a seed production and plant breeding facility. The Directors believe that the Group has the ability to grow its business through the extension of its plantations, with the potential to double its entire current plantation area within seven to eight years
• NBPOL is fully vertically integrated, producing its own seed (which it also sells globally) and plants, cultivating and harvesting its own land, and processing and refining palm oil. It also contracts directly with its end customers in the EU and arranges shipping of its products
• The Company has a 40 year history of growth and has been listed on the Port Moresby Stock Exchange ("POMSoX") since 1999
• NBPOL had audited consolidated revenue of approximately USD115.0m and USD133.8m in the financial years ended 31 December 2005 and 2006 respectively, and profits after tax of approximately USD19.1m and USD47.8m. In the six months to 30 June 2007, NBPOL had turnover of approximately USD105.5 and profits after tax of approximately USD56.7. Compared to the same period in 2006, the first six months of 2007 returned increases of approximately 56 per cent. and 271 per cent. in turnover and profit after tax respectively
• The Company’s main palm oil operations are based in Papua New Guinea ("PNG") and the Solomon Islands. NBPOL is one of the largest private sector employers in PNG and, in 2006, its revenues made up approximately 3.3% of the country's total export value (source: CIA World Factbook)
• The palm oil market is undergoing a period of rapid change with demand from the developing and urbanising Asian economies and the new biofuel industry driving a marked increase in demand for vegetable oil products, including palm oil
• The global price of palm oil has risen in response in part to this marked change in demand, and the Directors of NBPOL believe that there is the potential for these higher prices to continue. Palm oil prices over the 12 months to mid-November 2007 have shown an approximate doubling
• NBPOL has maintained a long association with its major customers, all of which are based in the EU and contract with NBPOL in US Dollars. Due to a long standing treaty between the EU and the African, Caribbean and Pacific group of states (including Papua New Guinea), sales of palm oil products to the EU benefit from certain import duty exemptions, allowing the Company an effective premium on its regular prices to customers in the EU
• NBPOL is managed by a stable management team headed by three UK executive directors. The CEO is 47 and has been with the Company for 23 years
• NBPOL estimates its average cost of production in the financial year ended 31 December 2006 was approximately USD262/tonne of CPO. The spot price for crude palm oil as at 10 December 2007 was $930/tonne based on the CPO market price CIF Rotterdam (source: Reuters)
• NBPOL has some of the world's highest yielding plantations of palm oil, and is currently achieving yields per hectare approximately 19 per cent. above the world average due, in the Directors' opinion, to the favourable natural environment in PNG, high quality genetic material and skilled management
• NBPOL has a high level of control over its entire supply chain, from the control and development of its genetic material, through planting, harvesting, processing and finally contracting with its end customers
• NBPOL has high regard for the importance of its sustainability credentials and is active in proving its performance through its certification to ISO 14001, and its close involvement and support of the Roundtable on Sustainable Palm Oil (“RSPO”) – the RSPO has around 160 members, of which 12 are non-governmental organisations (including WWF and Oxfam). NBPOL’s Head of Research, Dr Simon Lord, is Vice President of the RSPO
• There are significant barriers for would be competitors to enter palm oil production, not least the long lead-in time required to set up new projects – new palm oil supply takes 3-4 years from field planting to commercial harvesting
• Palm oil is a vegetable oil found in a large cross section of consumer foods and chemical products including: processed foods, cooking oils, cosmetics and a variety of chemicals. However, a new market for palm oil has accelerated since 2002, known as the 'biofuel' sector. NBPOL believes that this sector is being driven by governments seeking alternative fuel sources, and burning vegetable oil as fuel is one such form of alternative (non-fossil fuel) energy
-ends-
This announcement which has been prepared by, and is the sole responsibility of, the Directors of New Britain Palm Oil Limited, has been approved for the purposes of section 21 of the Financial Services and Markets Act 2000 by Kaupthing Singer & Friedlander Capital Markets Limited.
This announcement does not constitute a prospectus relating to New Britain Palm Oil Limited and does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares in New Britain Palm Oil Limited in any jurisdiction nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with or act as any inducement to enter into, any contract therefor.
Recipients of this announcement who are considering acquiring ordinary shares in New Britain Palm Oil Limited are reminded that any such acquisition must be made only on the basis of the information contained in the prospectus published by New Britain Palm Oil Limited on 11 December 2007 in connection with the admission of its ordinary shares to the Official List of the Financial Services Authority and to trading on the London Stock Exchange plc's main market for listed securities (the “Prospectus”) which may be different from the information contained in this announcement.
The Prospectus has been filed with the Financial Services Authority (“FSA”). This document will be available for inspection at the FSA's Document Viewing Facility which is situated at
Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E15 5HS
and will be available, free of charge, during normal business hours from the Company's registered office and from the offices of Kaupthing Singer & Friedlander Capital Markets Limited at One Hanover Street, London W1S 1AX and Travers Smith, 10 Snow Hill, London EC1A 2AL until 25 December 2007.
Kaupthing Singer & Friedlander Capital Markets Limited , which is authorised and regulated in the United Kingdom by the Financial Services Authority and is a member of the London Stock Exchange, is acting exclusively for the Company as financial adviser, sponsor and broker and no-one else in connection with the Placing and proposed UK Admission. Kaupthing Singer & Friedlander Capital Markets Limited will not regard any other person as its customer or be responsible to any other person for providing the protections afforded to customers of Kaupthing Singer & Friedlander Capital Markets Limited nor for providing advice in relation to the transactions or arrangements referred to in this announcement.
Pacific Nominees Limited is acting exclusively for the Company and no-one else in connection with the proposed POMSoX Admission. Pacific Nominees will not regard any other person as its customer or be responsible to any other person for providing the protections afforded to customers of Pacific Nominees Limited nor for providing advice in relation to the transactions or arrangements referred to in this announcement.
The ordinary shares in the capital of NBPOL ("Ordinary Shares") have not been, and will not be registered under the United States Securities Act of 1933, as amended (the 'Securities Act') or under the securities legislation of any state of the United States or under applicable laws of any of Canada, Australia, Malaysia, the Republic of South Africa or Japan, and, subject to certain exceptions, may not be offered or sold in the United States or to or for the benefit of US persons (as such term is defined in Regulation S under the Securities Act) or to any national, resident or citizen of any of Canada, Australia, Malaysia, the Republic of South Africa or Japan.
Information contained in this announcement may include 'forward-looking statements'. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding NBPOL's financial position, business strategy, plans and objectives of management for future operations are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of NBPOL to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. NBPOL and Kaupthing Singer & Friedlander expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward looking statements contained in this announcement to reflect any change in NBPOL's expectations with regard thereto, any new information or any change in events, conditions or circumstances on which any such statements are based, unless required to do so by the Financial Services and Markets Act 2000, the Listing Rules of the UK Listing Authority or other applicable laws, regulations or rules.
kulim错综复杂的cash offer
kulim's 50.68% subsidiary，New Britain Palm Oil Limited (“NBPOL”)拟收购位于Papua New Guinea's Port Moresby Stock Exchange(png交易所)上市的Ramu Agri-Industries Limited (“Ramu” )的100%股权。
简言之，就是kulim's nbpol cash offer Ramu
------------------------------------------------------------
kulim必须向三处地方宣布，分别是london stock exchange/bursamalaysia/png stock exchange。原因是nbpol同时在png和LSE上市。
http://www.pomsox.com.pg/company_info.php?code=NBO
http://www.londonstockexchange.com/en-gb/pricesnews/prices/system/detailedprices.htm?sym=PG0009239032GBGBXSET3B298688NBPO
Ramu Agri-Industries (previously Ramu Sugar Limited) is the largest sugar producer and exporter in PNG. The company was partially floated and successfully listed on the market in September 2002. The company's core business is in growing and producing sugar. The company is also diversifying into other agricultural based activities.
For more information, visit the company website at: site under construction
目前并不能用于评估cash offer的价值，因为我们暂时不知道Ramu的财务记录(png交易所并没有提供他们的财务记录)。
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bursa announcement
New Britain Palm Oil Limited’s USD43.8 million cash offer for Ramu Agri-Industries (“the Offer”)
The Board of Directors of Kulim (“The Board”) wishes to announce that New Britain Palm Oil Limited (“NBPOL”), a 50.68% subsidiary of Kulim, has today made an announcement to the London Stock Exchange stating that it is making an offer for the entire issued share capital of Ramu Agri-Industries Limited (“Ramu” or “the company”), a company listed on the Papua New Guinea's Port Moresby Stock Exchange.
The cash consideration offered for each Ramu Share is K5.00 (approximately USD1.80) with total consideration of approximately K120.5 million (approximately USD43.8 million) in cash to be funded from NBPOL’s existing cash resources.
Ramu holds long term leases of approximately 30,000 hectares of land in the Ramu Valley in Papua New Guinea. The company currently has over 4,500 productive hectares of oil palm plantations with an established mill and infrastructure, as well as approximately 16,000 hectares of land that have the potential to be developed into oil palm plantations.
The acquisition of Ramu would allow NBPOL to expand significantly its oil palm plantations, in line with the stated objective of its London Stock Exchange listing in December 2007 to double its entire plantation area within seven to eight years.
The Board is supportive of the Offer and is of the opinion that the Offer would be in the best interest of Kulim.
This announcement is dated 16 May 2008
------------------------------------------------------------
LSE annoucement (或许这是最后希望，否则，只能等待分析员从发布会拿资料回来。)
Regulatory Announcement
Go to market news section
Company NEW BRITAIN PALM OIL LD ORD NPV (DI)
TIDM NBPO
Headline Cash Offer
Released 08:15 16-May-08
Number 6204U08
RNS Number : 6204U
New Britain Palm Oil Limited
16 May 2008
16 May 2008
NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO AUSTRALIA, CANADA, JAPAN, MALAYSIA, THE REPUBLIC OF SOUTH AFRICA OR THE UNITED STATES
NEW BRITAIN PALM OIL LIMITED
US$43.8 MILLION CASH OFFER FOR
RAMU AGRI-INDUSTRIES LIMITED
INCLUDING LONG TERM LEASES OVER 30,000 HECTARES OF LAND
New Britain Palm Oil Limited (LSE: NBPO) ("NBPOL" or the "Company"), a large scale integrated industrial producer of palm oil in Australasia, announces a cash offer (the "Offer") for all of the shares in the capital of Ramu Agri-Industries Limited ("Ramu") which it does not own. Ramu, a company listed on Papua New Guinea's ("PNG") Port Moresby Stock Exchange, holds long term leases over approximately 30,000 hectares of land in the Ramu Valley in PNG.
At the date of the Offer the Company holds 4,689,283 shares in Ramu representing 19.45 per cent. of the issued capital of Ramu.
The cash consideration offered for each Ramu Share is K5.00 (approximately US$1.82) with total consideration (including the shares already acquired by NBPOL above) of approximately K120.5 million (approximately US$43.8 million) in cash to be funded from NBPOL's existing cash resources. As at 31 March 2007, Ramu had net debt of approximately K37.7 million (approximately US$13.7 million)
KEY HIGHLIGHTS
· NBPOL's stated objective on its London listing in December 2007 was to double its entire plantation area within seven to eight years. The acquisition of Ramu would allow NBPOL to expand significantly its oil palm plantations, providing approximately 50 per cent. of its plantation development target once developed. NBPOL remains confident about delivering on its stated objective.
· The directors of NBPOL believe that the Offer represents compelling value. Ramu has over 4,500 productive hectares of oil palm plantations, with an established mill and infrastructure, and approximately 16,000 hectares of land that the Directors expect to have the potential to be developed into oil palm plantations. The Directors believe that the price per hectare, once the development costs are factored in, is likely to befavourablewhen compared to similar land currently being sold in Indonesia and Malaysia.
· For the year ended 31 March 2007, Ramu reported audited turnover of approximately K107.0 million (approximately US$38.9 million) and profits before tax of approximately K6.4 million (approximately US$2.3 million). As at 31 March 2007, Ramu reported gross assets of approximately K155.1 million (US$56.4 million).
· NBPOL’s rigorous sustainability criteria and highly regarded environmental credentials are expected to be maintained across Ramu's land holding.
· The directors of NBPOL are confident that the new plantations will benefit greatly from NBPOL’s high quality seeds and its skilled and successful management methods. Furthermore, they expect the potential yield of Fresh Fruit Bunches (“FFB”) per hectare to be good with high oil extraction rates.
· A takeover notice under the PNG Takeovers Code, dated 16 May 2008, has been sent by NBPOL to Ramu. The offer document must be posted to Ramu Shareholders within 30 days from the date of the Takeover Notice, which then triggers the commencement of the offer period.
· The Offer will be made in accordance with the rules of the PNG Takeovers Code and will remain open for acceptance for 30 days from the date of the offer document, subject to any extensions permitted under the PNG Takeovers Code.
· The Offer will be conditional on, amongst other things, valid acceptances being received in respect of not less than 90 per cent. of the Ramu Shares to which the Offer relates (though this condition can be waived by theOfferorin accordance with the terms of thePNG TakeoversCode)and the approval of the Bank of Papua New Guinea and PNG's Investment Promotion Authority.
This summary should be read in conjunction with, and is subject to, the full text of this announcement. The Offer will be made in accordance with the rules of the PNG Takeovers Code and the full conditions and terms which will be set out in the offer document expected to be despatched to Ramu Shareholders as soon as is reasonably practicable.
Nick Thompson, NBPOL's Chief Executive Officer, commented:
"This is an important acquisition for New Britain Palm Oil. Ramu is an excellent strategic and operational fit with NBPOL, adding approximately 30,000 hectares of extremely attractively priced land, much of it for potential development into oil palm plantations. It accelerates considerably our planting programme, whilst at the same time maintaining our historic focus on sustainable and ethical palm oil production.
With our long and successful track record of developing and managing our oil palm estates and with the use of our high quality seeds as a fully integrated producer, we believe that this acquisition should build on our achievements. New Britain Palm Oil's strong balance sheet should allow us to develop quickly the agricultural potential of Ramu's assets. We remain as a group very well positioned to capitalise on the positive trends we see in the palm oil market."
nquiries:
Gavin Anderson (Financial PR Adviser)
Ken Cronin / Janine Brewis / Anthony Hughes
Tel: +44(0)20 7554 1400
Email: nbpol@gavinanderson.co.uk
New Britain Palm Oil Limited
Nick Thompson
Alan Chaytor
David Dann
Tel: +44(0)20 7554 1400
Kaupthing Singer & Friedlander
Nicholas How
Tel: +44 (0)20 3205 5000
Website: www.nbpol.com.pg
16 May 2008
NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO AUSTRALIA, CANADA, JAPAN, MALAYSIA, THE REPUBLIC OF SOUTH AFRICA OR THE UNITED STATES
NEW BRITAIN PALM OIL LIMITED
US$43.8 MILLION CASH OFFER FOR
RAMU AGRI-INDUSTRIES LIMITED
INCLUDING LONG TERM LEASES OVER 30,000 HECTARES OF LAND
New Britain Palm Oil Limited ("NBPOL" or the "Company"), a large scale integrated industrial producer of palm oil in Australasia, announces a cash offer (the "Offer") for all of the shares in Ramu Agri-Industries Limited ("Ramu") which it does not hold. Ramu, a company listed on the Port Moresby Stock Exchange, holds long term leases over approximately 30,000 hectares of land in the Ramu Valley in PNG.
At the date of the Offer the Company holds 4,689,283 shares in Ramu representing 19.45 per cent. of the issued capital of Ramu.
The cash consideration offered for each Ramu Share is K5.00 (approximately US$1.82) with total consideration (including the shares already acquired by NBPOL above) of approximately K120.5 million (approximately US$43.8 million) in cash to be funded from NBPOL's existing cash resources. As at 31 March 2007, Ramu had net debt of approximately K37.7 million (approximately US$13.7 million).
The Offer
A takeover notice under the PNG Takeovers Code, dated 16 May 2008, was sent by NBPOL to Ramu. Ramu has 14 days to respond to the Takeover Notice shortly following which NBPOL will despatch the offer document to Ramu Shareholders. The despatch of the offer document, which must be within 30 days of the sending of the Takeover Notice, triggers the commencement of the offer period which must be no shorter than 30 days, and no longer than 90 days. Accordingly, further updates will be made when appropriate.
The Offer will be made in accordance with the rules of the PNG Takeovers Code and will remain open for acceptance for 30 days from the date of the offer document, subject to any extensions permitted under the PNG Takeovers Code and unless the Offer is withdrawn in accordance with the PNG Takeovers Code.
The Offer will be conditional on, amongst other things, valid acceptances being received in respect of not less than 90 per cent. of the Ramu Shares to which the Offer relates (though this condition can be waived by the Offeror in accordance with the terms of the PNG Takeovers Code) and the approval of the Bank of Papua New Guinea and PNG's Investment Promotion Authority. Other terms and conditions of the Offer are considered customary for a public offer.
The Ramu Shares will be acquired pursuant to the Offer fully paid and free from all mortgages, charges, liens, encumbrances and interests of third parties of any kind, whether legal or otherwise, and restrictions on transfer of any kind. The Offeror will be entitled to all Rights accruing after the time of service of the Takeover Notice on Ramu in respect Ramu Shares which it acquires under the Offer.
Full acceptance of the Offer will result in a payment to Ramu Shareholders of approximately US$43.8 million.
About Ramu
Ramu is the largest producer and exporter of sugar in PNG, as well as being PNG's largest beef producer. It also has land under other crops including oil palm, peanuts and cashew nuts.
Ramu's current land holding of approximately 30,000 hectares comprises over 4,500 productive hectares of oil palm plantations, with an established mill and associated infrastructure, 8,000 hectares currently under sugar cane, 14,000 hectares currently under beef cattle grazing and 2-3,000 hectares under other crops. As reported in its latest annual report, Ramu has a total of around 16,000 head of cattle.
For the year ended 31 March 2007, Ramu reported audited turnover of approximately K107.0 million (approximately US$38.9 million) and profits before tax of approximately K6.4million (approximately US$2.3 million). As at 31 March 2007, Ramu reported gross assets of approximately K155.1 million (US$56.4 million).
Rationale for the Offer
Ramu is considered to be anexcellent strategic and operational fit with NBPOL's existing 40,000 plus hectares of planted oil palm plantations.
The directors of NBPOL believe that the Offer represents compelling value. Ramu has over 4,500 productive hectares of oil palm plantations, with an established mill and infrastructure, and approximately 16,000 hectares of land that the Directors expect to have the potential to be developed into oil palm plantations. The Directors believe that the price per hectare, once the development costs are factored in, is likely to be favourable when compared to similar land currently being sold in Indonesia and Malaysia.
The Ramu Valley, where Ramu's operations are based, is on mainland PNG. The shipping port used by Ramu at the major town of Lae is well-positioned such that there would be virtually no deviation of the shipping route to/from NBPOL's current plantations in West New Britain.
The Directors are confident that NBPOL can fund the development costs of the 16,000 hectares of oil palm that is not yet planted (inclusive of all housing, infrastructure and a second mill) from NBPOL's cash resources. The Directors consider that the expected development costs are based on conservative assumptions and the Directors have placed no valuation on existing infrastructure of housing and workshops. The Directors are also confident that their assumptions of future operating costs and palm oil prices are realistic.
NBPOL's rigorous sustainability criteria and highly regarded environmental credentials are expected to be maintained across Ramu's land holding. The Directors do not expect any environmental issues as the areas of Ramu's land holding the Directors have identified as having the potential to be developed into oil palm plantations are already planted with sugar cane or left as pasture, which also has the additional benefit of making the areas more cost effective to plant with oil palm.
NBPOL's stated objective on its London listing in December 2007 was to double its entire plantation area within seven to eight years. The acquisition of Ramu would allow NBPOL to expand significantly its oil palm plantations, providing approximately 50 per cent. of its plantation development target once developed. NBPOL remains confident about delivering on its stated objective.
The Directors are confident that the new plantations will benefit greatly from NBPOL's high quality seeds and its skilled and successful management methods. The Directors expect the potential yield of Fresh Fruit Bunches ("FFB") per hectare to be good with high oil extraction rates.
Notes to editors
NBPOL is a large scale industrial producer of sustainable palm oil in Australasia, with over 40,000 hectares of planted palm oil plantations, five oil mills, a refinery and a seed production and plant breeding facility. It is quoted on the London Stock Exchange's main market under the ticker NBPO.L (commencement of dealing on 17 December 2007) and on the Port Moresby Stock Exchange in PNG.
NBPOL is fully vertically integrated, producing its own seed (which it also sells globally) and plants, cultivating and harvesting its own land and processing and refining palm oil. It also contracts directly with its end customers in the EU and arranges shipping of its products.
The palm oil market is undergoing a period of rapid change with demand from the developing and urbanising Asian economies and the new biofuel industry driving a marked increase in demand for vegetable oil products, including palm oil. The global price of palm oil has risen in response in part to this marked change in demand.
NBPOL has some of the world's highest yielding plantations of palm oil and is currently achieving yields per hectare approximately 19 per cent. above the world average due, in the Directors' opinion, to the favourable natural environment in PNG, high quality genetic material and skilled management.
NBPOL has a high level of control over its entire supply chain, from the control and development of its genetic material, through planting, harvesting, processing and finally contracting with its end customers.
NBPOL has high regard for the importance of its sustainability credentials and is active in proving its performance through its certification to ISO 14001 and its close involvement and support of the Roundtable on Sustainable Palm Oil ("RSPO") - the RSPO has over 260 members, of which 12 are non-governmental organisations (including WWF and Oxfam). NBPOL's Head of Research, Dr Simon Lord, is Vice President of the RSPO.
- ends -
This announcement does not constitute an offer to sell or the solicitation of an offer to acquire ordinary shares in the share capital of NBPOL.
Information contained in this announcement may include 'forward-looking statements'. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding NBPOL's financial position, business strategy, plans and objectives of management for future operations are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of NBPOL to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. NBPOL expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements contained in this announcement to reflect any change in NBPOL's expectations with regard thereto, any new information or any change in events, conditions or circumstances on which any such statements are based, unless required to do so by the Financial Services and Markets Act 2000, the Listing Rules of the UK Listing Authority or other applicable laws, regulations or rules.
No statement in this announcement is intended to be a profit forecast and no statement in this announcement should be interpreted to mean that Earnings per Share for the current or future financial years would necessarily match or exceed the historical published Earnings per Share.
DEFINITIONS
In this document unless the context otherwise requires:
PNG Takeovers Code means the Takeovers Code 1998 having the force of law under the Securities Act;
Directors means the directors of NBPOL;
K and Kina is the lawful currency of the Independent State of Papua New Guinea;
NBPOL, the Company or the Offeror means New Britain Palm Oil Limited;
Offer means an offer referred to in the Takeover Notice and the offer document;
PNG means the Independent State of Papua New Guinea;
POMSoX means Port Moresby Stock Exchange Limited;
Ramu Share(s) means fully paid ordinary shares in the capital of Ramu on issue as at the date of the Offer and all Rights attached to them;
Ramu Shareholder(s) means holders of Ramu Shares;
Rights means all accretions, rights or benefits arising to or arising from the Ramu Shares directly or indirectly after the date of service of the Takeover Notice on Ramu (including all rights to receive dividends and to receive or subscribe for shares, stock, units, notes or options and all other distributions or entitlements declared, paid or issued by Ramu after that date);
Securities Act means the Securities Act 1997; and
Takeover Notice means the takeover notice under Rule 22(1) of the PNG Takeovers Code, served by the Offeror on Ramu and dated 16 May 2008.
An exchange rate of 0.3635 US$ / K as at 15 May 2008 (per Bloomberg) has been used for the purposes of translation in this announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
简言之，就是kulim's nbpol cash offer Ramu
------------------------------------------------------------
kulim必须向三处地方宣布，分别是london stock exchange/bursamalaysia/png stock exchange。原因是nbpol同时在png和LSE上市。
http://www.pomsox.com.pg/company_info.php?code=NBO
http://www.londonstockexchange.com/en-gb/pricesnews/prices/system/detailedprices.htm?sym=PG0009239032GBGBXSET3B298688NBPO
Ramu Agri-Industries (previously Ramu Sugar Limited) is the largest sugar producer and exporter in PNG. The company was partially floated and successfully listed on the market in September 2002. The company's core business is in growing and producing sugar. The company is also diversifying into other agricultural based activities.
For more information, visit the company website at: site under construction
目前并不能用于评估cash offer的价值，因为我们暂时不知道Ramu的财务记录(png交易所并没有提供他们的财务记录)。
------------------------------------------------------------
bursa announcement
New Britain Palm Oil Limited’s USD43.8 million cash offer for Ramu Agri-Industries (“the Offer”)
The Board of Directors of Kulim (“The Board”) wishes to announce that New Britain Palm Oil Limited (“NBPOL”), a 50.68% subsidiary of Kulim, has today made an announcement to the London Stock Exchange stating that it is making an offer for the entire issued share capital of Ramu Agri-Industries Limited (“Ramu” or “the company”), a company listed on the Papua New Guinea's Port Moresby Stock Exchange.
The cash consideration offered for each Ramu Share is K5.00 (approximately USD1.80) with total consideration of approximately K120.5 million (approximately USD43.8 million) in cash to be funded from NBPOL’s existing cash resources.
Ramu holds long term leases of approximately 30,000 hectares of land in the Ramu Valley in Papua New Guinea. The company currently has over 4,500 productive hectares of oil palm plantations with an established mill and infrastructure, as well as approximately 16,000 hectares of land that have the potential to be developed into oil palm plantations.
The acquisition of Ramu would allow NBPOL to expand significantly its oil palm plantations, in line with the stated objective of its London Stock Exchange listing in December 2007 to double its entire plantation area within seven to eight years.
The Board is supportive of the Offer and is of the opinion that the Offer would be in the best interest of Kulim.
This announcement is dated 16 May 2008
------------------------------------------------------------
LSE annoucement (或许这是最后希望，否则，只能等待分析员从发布会拿资料回来。)
Regulatory Announcement
Go to market news section
Company NEW BRITAIN PALM OIL LD ORD NPV (DI)
TIDM NBPO
Headline Cash Offer
Released 08:15 16-May-08
Number 6204U08
RNS Number : 6204U
New Britain Palm Oil Limited
16 May 2008
16 May 2008
NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO AUSTRALIA, CANADA, JAPAN, MALAYSIA, THE REPUBLIC OF SOUTH AFRICA OR THE UNITED STATES
NEW BRITAIN PALM OIL LIMITED
US$43.8 MILLION CASH OFFER FOR
RAMU AGRI-INDUSTRIES LIMITED
INCLUDING LONG TERM LEASES OVER 30,000 HECTARES OF LAND
New Britain Palm Oil Limited (LSE: NBPO) ("NBPOL" or the "Company"), a large scale integrated industrial producer of palm oil in Australasia, announces a cash offer (the "Offer") for all of the shares in the capital of Ramu Agri-Industries Limited ("Ramu") which it does not own. Ramu, a company listed on Papua New Guinea's ("PNG") Port Moresby Stock Exchange, holds long term leases over approximately 30,000 hectares of land in the Ramu Valley in PNG.
At the date of the Offer the Company holds 4,689,283 shares in Ramu representing 19.45 per cent. of the issued capital of Ramu.
The cash consideration offered for each Ramu Share is K5.00 (approximately US$1.82) with total consideration (including the shares already acquired by NBPOL above) of approximately K120.5 million (approximately US$43.8 million) in cash to be funded from NBPOL's existing cash resources. As at 31 March 2007, Ramu had net debt of approximately K37.7 million (approximately US$13.7 million)
KEY HIGHLIGHTS
· NBPOL's stated objective on its London listing in December 2007 was to double its entire plantation area within seven to eight years. The acquisition of Ramu would allow NBPOL to expand significantly its oil palm plantations, providing approximately 50 per cent. of its plantation development target once developed. NBPOL remains confident about delivering on its stated objective.
· The directors of NBPOL believe that the Offer represents compelling value. Ramu has over 4,500 productive hectares of oil palm plantations, with an established mill and infrastructure, and approximately 16,000 hectares of land that the Directors expect to have the potential to be developed into oil palm plantations. The Directors believe that the price per hectare, once the development costs are factored in, is likely to befavourablewhen compared to similar land currently being sold in Indonesia and Malaysia.
· For the year ended 31 March 2007, Ramu reported audited turnover of approximately K107.0 million (approximately US$38.9 million) and profits before tax of approximately K6.4 million (approximately US$2.3 million). As at 31 March 2007, Ramu reported gross assets of approximately K155.1 million (US$56.4 million).
· NBPOL’s rigorous sustainability criteria and highly regarded environmental credentials are expected to be maintained across Ramu's land holding.
· The directors of NBPOL are confident that the new plantations will benefit greatly from NBPOL’s high quality seeds and its skilled and successful management methods. Furthermore, they expect the potential yield of Fresh Fruit Bunches (“FFB”) per hectare to be good with high oil extraction rates.
· A takeover notice under the PNG Takeovers Code, dated 16 May 2008, has been sent by NBPOL to Ramu. The offer document must be posted to Ramu Shareholders within 30 days from the date of the Takeover Notice, which then triggers the commencement of the offer period.
· The Offer will be made in accordance with the rules of the PNG Takeovers Code and will remain open for acceptance for 30 days from the date of the offer document, subject to any extensions permitted under the PNG Takeovers Code.
· The Offer will be conditional on, amongst other things, valid acceptances being received in respect of not less than 90 per cent. of the Ramu Shares to which the Offer relates (though this condition can be waived by theOfferorin accordance with the terms of thePNG TakeoversCode)and the approval of the Bank of Papua New Guinea and PNG's Investment Promotion Authority.
This summary should be read in conjunction with, and is subject to, the full text of this announcement. The Offer will be made in accordance with the rules of the PNG Takeovers Code and the full conditions and terms which will be set out in the offer document expected to be despatched to Ramu Shareholders as soon as is reasonably practicable.
Nick Thompson, NBPOL's Chief Executive Officer, commented:
"This is an important acquisition for New Britain Palm Oil. Ramu is an excellent strategic and operational fit with NBPOL, adding approximately 30,000 hectares of extremely attractively priced land, much of it for potential development into oil palm plantations. It accelerates considerably our planting programme, whilst at the same time maintaining our historic focus on sustainable and ethical palm oil production.
With our long and successful track record of developing and managing our oil palm estates and with the use of our high quality seeds as a fully integrated producer, we believe that this acquisition should build on our achievements. New Britain Palm Oil's strong balance sheet should allow us to develop quickly the agricultural potential of Ramu's assets. We remain as a group very well positioned to capitalise on the positive trends we see in the palm oil market."
nquiries:
Gavin Anderson (Financial PR Adviser)
Ken Cronin / Janine Brewis / Anthony Hughes
Tel: +44(0)20 7554 1400
Email: nbpol@gavinanderson.co.uk
New Britain Palm Oil Limited
Nick Thompson
Alan Chaytor
David Dann
Tel: +44(0)20 7554 1400
Kaupthing Singer & Friedlander
Nicholas How
Tel: +44 (0)20 3205 5000
Website: www.nbpol.com.pg
16 May 2008
NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO AUSTRALIA, CANADA, JAPAN, MALAYSIA, THE REPUBLIC OF SOUTH AFRICA OR THE UNITED STATES
NEW BRITAIN PALM OIL LIMITED
US$43.8 MILLION CASH OFFER FOR
RAMU AGRI-INDUSTRIES LIMITED
INCLUDING LONG TERM LEASES OVER 30,000 HECTARES OF LAND
New Britain Palm Oil Limited ("NBPOL" or the "Company"), a large scale integrated industrial producer of palm oil in Australasia, announces a cash offer (the "Offer") for all of the shares in Ramu Agri-Industries Limited ("Ramu") which it does not hold. Ramu, a company listed on the Port Moresby Stock Exchange, holds long term leases over approximately 30,000 hectares of land in the Ramu Valley in PNG.
At the date of the Offer the Company holds 4,689,283 shares in Ramu representing 19.45 per cent. of the issued capital of Ramu.
The cash consideration offered for each Ramu Share is K5.00 (approximately US$1.82) with total consideration (including the shares already acquired by NBPOL above) of approximately K120.5 million (approximately US$43.8 million) in cash to be funded from NBPOL's existing cash resources. As at 31 March 2007, Ramu had net debt of approximately K37.7 million (approximately US$13.7 million).
The Offer
A takeover notice under the PNG Takeovers Code, dated 16 May 2008, was sent by NBPOL to Ramu. Ramu has 14 days to respond to the Takeover Notice shortly following which NBPOL will despatch the offer document to Ramu Shareholders. The despatch of the offer document, which must be within 30 days of the sending of the Takeover Notice, triggers the commencement of the offer period which must be no shorter than 30 days, and no longer than 90 days. Accordingly, further updates will be made when appropriate.
The Offer will be made in accordance with the rules of the PNG Takeovers Code and will remain open for acceptance for 30 days from the date of the offer document, subject to any extensions permitted under the PNG Takeovers Code and unless the Offer is withdrawn in accordance with the PNG Takeovers Code.
The Offer will be conditional on, amongst other things, valid acceptances being received in respect of not less than 90 per cent. of the Ramu Shares to which the Offer relates (though this condition can be waived by the Offeror in accordance with the terms of the PNG Takeovers Code) and the approval of the Bank of Papua New Guinea and PNG's Investment Promotion Authority. Other terms and conditions of the Offer are considered customary for a public offer.
The Ramu Shares will be acquired pursuant to the Offer fully paid and free from all mortgages, charges, liens, encumbrances and interests of third parties of any kind, whether legal or otherwise, and restrictions on transfer of any kind. The Offeror will be entitled to all Rights accruing after the time of service of the Takeover Notice on Ramu in respect Ramu Shares which it acquires under the Offer.
Full acceptance of the Offer will result in a payment to Ramu Shareholders of approximately US$43.8 million.
About Ramu
Ramu is the largest producer and exporter of sugar in PNG, as well as being PNG's largest beef producer. It also has land under other crops including oil palm, peanuts and cashew nuts.
Ramu's current land holding of approximately 30,000 hectares comprises over 4,500 productive hectares of oil palm plantations, with an established mill and associated infrastructure, 8,000 hectares currently under sugar cane, 14,000 hectares currently under beef cattle grazing and 2-3,000 hectares under other crops. As reported in its latest annual report, Ramu has a total of around 16,000 head of cattle.
For the year ended 31 March 2007, Ramu reported audited turnover of approximately K107.0 million (approximately US$38.9 million) and profits before tax of approximately K6.4million (approximately US$2.3 million). As at 31 March 2007, Ramu reported gross assets of approximately K155.1 million (US$56.4 million).
Rationale for the Offer
Ramu is considered to be anexcellent strategic and operational fit with NBPOL's existing 40,000 plus hectares of planted oil palm plantations.
The directors of NBPOL believe that the Offer represents compelling value. Ramu has over 4,500 productive hectares of oil palm plantations, with an established mill and infrastructure, and approximately 16,000 hectares of land that the Directors expect to have the potential to be developed into oil palm plantations. The Directors believe that the price per hectare, once the development costs are factored in, is likely to be favourable when compared to similar land currently being sold in Indonesia and Malaysia.
The Ramu Valley, where Ramu's operations are based, is on mainland PNG. The shipping port used by Ramu at the major town of Lae is well-positioned such that there would be virtually no deviation of the shipping route to/from NBPOL's current plantations in West New Britain.
The Directors are confident that NBPOL can fund the development costs of the 16,000 hectares of oil palm that is not yet planted (inclusive of all housing, infrastructure and a second mill) from NBPOL's cash resources. The Directors consider that the expected development costs are based on conservative assumptions and the Directors have placed no valuation on existing infrastructure of housing and workshops. The Directors are also confident that their assumptions of future operating costs and palm oil prices are realistic.
NBPOL's rigorous sustainability criteria and highly regarded environmental credentials are expected to be maintained across Ramu's land holding. The Directors do not expect any environmental issues as the areas of Ramu's land holding the Directors have identified as having the potential to be developed into oil palm plantations are already planted with sugar cane or left as pasture, which also has the additional benefit of making the areas more cost effective to plant with oil palm.
NBPOL's stated objective on its London listing in December 2007 was to double its entire plantation area within seven to eight years. The acquisition of Ramu would allow NBPOL to expand significantly its oil palm plantations, providing approximately 50 per cent. of its plantation development target once developed. NBPOL remains confident about delivering on its stated objective.
The Directors are confident that the new plantations will benefit greatly from NBPOL's high quality seeds and its skilled and successful management methods. The Directors expect the potential yield of Fresh Fruit Bunches ("FFB") per hectare to be good with high oil extraction rates.
Notes to editors
NBPOL is a large scale industrial producer of sustainable palm oil in Australasia, with over 40,000 hectares of planted palm oil plantations, five oil mills, a refinery and a seed production and plant breeding facility. It is quoted on the London Stock Exchange's main market under the ticker NBPO.L (commencement of dealing on 17 December 2007) and on the Port Moresby Stock Exchange in PNG.
NBPOL is fully vertically integrated, producing its own seed (which it also sells globally) and plants, cultivating and harvesting its own land and processing and refining palm oil. It also contracts directly with its end customers in the EU and arranges shipping of its products.
The palm oil market is undergoing a period of rapid change with demand from the developing and urbanising Asian economies and the new biofuel industry driving a marked increase in demand for vegetable oil products, including palm oil. The global price of palm oil has risen in response in part to this marked change in demand.
NBPOL has some of the world's highest yielding plantations of palm oil and is currently achieving yields per hectare approximately 19 per cent. above the world average due, in the Directors' opinion, to the favourable natural environment in PNG, high quality genetic material and skilled management.
NBPOL has a high level of control over its entire supply chain, from the control and development of its genetic material, through planting, harvesting, processing and finally contracting with its end customers.
NBPOL has high regard for the importance of its sustainability credentials and is active in proving its performance through its certification to ISO 14001 and its close involvement and support of the Roundtable on Sustainable Palm Oil ("RSPO") - the RSPO has over 260 members, of which 12 are non-governmental organisations (including WWF and Oxfam). NBPOL's Head of Research, Dr Simon Lord, is Vice President of the RSPO.
- ends -
This announcement does not constitute an offer to sell or the solicitation of an offer to acquire ordinary shares in the share capital of NBPOL.
Information contained in this announcement may include 'forward-looking statements'. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding NBPOL's financial position, business strategy, plans and objectives of management for future operations are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of NBPOL to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. NBPOL expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements contained in this announcement to reflect any change in NBPOL's expectations with regard thereto, any new information or any change in events, conditions or circumstances on which any such statements are based, unless required to do so by the Financial Services and Markets Act 2000, the Listing Rules of the UK Listing Authority or other applicable laws, regulations or rules.
No statement in this announcement is intended to be a profit forecast and no statement in this announcement should be interpreted to mean that Earnings per Share for the current or future financial years would necessarily match or exceed the historical published Earnings per Share.
DEFINITIONS
In this document unless the context otherwise requires:
PNG Takeovers Code means the Takeovers Code 1998 having the force of law under the Securities Act;
Directors means the directors of NBPOL;
K and Kina is the lawful currency of the Independent State of Papua New Guinea;
NBPOL, the Company or the Offeror means New Britain Palm Oil Limited;
Offer means an offer referred to in the Takeover Notice and the offer document;
PNG means the Independent State of Papua New Guinea;
POMSoX means Port Moresby Stock Exchange Limited;
Ramu Share(s) means fully paid ordinary shares in the capital of Ramu on issue as at the date of the Offer and all Rights attached to them;
Ramu Shareholder(s) means holders of Ramu Shares;
Rights means all accretions, rights or benefits arising to or arising from the Ramu Shares directly or indirectly after the date of service of the Takeover Notice on Ramu (including all rights to receive dividends and to receive or subscribe for shares, stock, units, notes or options and all other distributions or entitlements declared, paid or issued by Ramu after that date);
Securities Act means the Securities Act 1997; and
Takeover Notice means the takeover notice under Rule 22(1) of the PNG Takeovers Code, served by the Offeror on Ramu and dated 16 May 2008.
An exchange rate of 0.3635 US$ / K as at 15 May 2008 (per Bloomberg) has been used for the purposes of translation in this announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
15 May 2008
briefly news
TH Plantation is eyeing land in four states to achieveits landbank target of 32,000ha by 2009.The company currently has 28,730ha ofplantation land and plans to acquire newland from Tabung Haji or landowners inPen.& E.Msia. Valuation appearsundemanding at 8x FY08 PE vs.18x forbig-cap planters and offers 6% dvd. yield.
庄在作祟的QL
QL基本面并不是想象的好，市场给予的评级，只是庄在作祟，这股能走多远，要看庄能到什么极限。烂泥是扶不上墙的，如果QL没有一定分量，庄也不能长久，所以QL还不算烂泥。对我们来说，讲得越多，越有问题。这不是QL的错，是市场的错。
1. Investment Highlights / Summary
• Well diversified company with remarkable track record. QL’s business activities are diversified in the marine products, palm oil and integrated livestock industry. QL’s business activities are in line with Malaysia’s National Agriculture Plan and receive attractive tax incentives. QL is currently the largest producer of surimi in Asia and largest distributor of animal feed and surimi-based products manufacturer in Malaysia.
• Continued growth in marine products. QL is expanding its frozen surimi processing plant in Hutan Melintang to meet the increasing demand for surimi, as well as expanding its deep-sea fishing activities.
• Potential in national fisheries project. QL’s participation in the national fisheries consortium (KPNB) is a positive development, although the stake is small and details are still sketchy at the moment.
• Risks. QL’s marine and livestock businesses are susceptible to fluctuation in commodity prices. Furthermore, selling price of livestock products are controlled by Government who imposed a ceiling price. Adverse effect would be inflicted on its poultry segment in the unlikely event of a major bird flu outbreak in Malaysia.
• Initiate coverage with BUY call at RM3.03 fair value. We pegged QL’s EPS07f of 24.4 against 12.4x average PER of its regional peers in Thailand involved in marine products manufacturing business.
2. Background
Business in marine products, CPO milling & livestock farming
Corporate profile. A diversified Malaysian agricultural resource-based group, QL Resources Berhad (QL) and its subsidiaries are involved in marine products manufacturing, crude palm oil milling and integrated livestock farming.
Founded in 1987 by Mr. Chia Song Kun and other family members as a family business involved in small scale trading of marine-based products, it has since grown to become a resource-based corporation. QL was listed on the Second Board of Bursa Malaysia in March 2000, and Its listing was subsequently transferred to the Main Board in January 2002.
Largest surimi producer in Asia
Currently, management states that QL is the largest producer of surimi in Asia and largest fishmeal and surimi-based products manufacturer in Malaysia. All divisions are profitable and have been recording a turnover CAGR of 18% and profit after tax CAGR of 23% since its listing in 2000.
QL is one of the five companies invited by the Ministry of Agriculture and Agro-based Industry to join the national fisheries consortium called Konsortium Perikanan Nasional Berhad (KPNB) which was set up in October 2005.
Business. QL is involved in three main strategic business units:
i) Marine Products Manufacturing (MPM)
Surimi and surimi-based products manufacturer. QL manufactures surimi (semi processed raw fish paste / de-boned fish meat which has been washed and frozen) and surimi-based products such as fishballs and fishcakes. Surimi is sold to other food manufacturers for further processing while surimi-based products are sold to end-consumers under its own brand names of “Double Shark”, “Double Dolphin”, “Mushroom” and “Top 1”.
40% of QL’s surimi is exported to Japan, Korea and Singapore whereas 10% of surimi-based products are exported to Singapore, Brunei and Australia. The remaining is for local consumption. Management estimates it has 25% market share locally for surimi/surimi-based products.
The Group currently operates 3 fish processing plants in Hutan Melintang in Perak, Endau in Johor and Tuaran in Sabah.
Fishmeal manufacturer. QL is Malaysia’s largest manufacturer of fishmeal which is a high protein fish-based animal feedstuff with a local market share of 30%. Fishmeal is made from the innards, scales, heads, bones and skin of fish not used to produce surimi. 70% of fishmeal is exported to China, Sri Lanka and Vietnam.
Deep-sea fishing. QL has 18 deep sea fishing licenses and operates 7 deep-sea fishing trawlers. These trawlers cost approximately RM1 million each. Deep sea fishing refers to fishing activities beyond 30 nautical miles offshore into the Exclusive Economic Zone and the international waters using vessels with a minimum capacity of 70 gross registered tonnes.
ii) Crude Palm Oil Milling (CPO Milling)
Palm oil plantation and mill. QL operates a 3,000 hectare oil palm plantation and two independent crude palm oil mills in Tawau, Sabah.
iii) Integrated Livestock Farming (ILF)
Distribution of animal feed raw materials. QL is the leading distributor of animal feed meal raw materials such as corn and soya bean meal in Malaysia, making up 18% of the Malaysian market share.
Broiler and layer farms. QL operates broiler farms (for meat) and layer farms (for eggs). Almost 70% of QL’s poultry activities are located in Sabah, East Malaysia. QL’s poultry layer farms in Negeri Sembilan, Kuching, Kota Kinabalu and Tawau produce approximately 800,000 eggs a day, making QL the leading poultry egg producer in Malaysia. QL’s broiler farms in Tawau, Sabah are known to be the leading integrated broiler producer in the Sabah state.
3. Financial Highlights
5-year turnover CAGR of 18%;profit CAGR of 22%
QL has a set of impressive financial track record. Since listing, the Group recorded a healthy turnover and net profit 5-year CAGR of 18% pa and 22% pa respectively. MPM posted highest profit CAGR at 30% followed by CPO milling (24%) and ILF (12%).
Improving margin, higher ROE
QL group’s EBITDA margin has been improving for the past several years, from 7.0% in FY04 to 7.6% in FY05. Cumulative 9-month EBITDA further strengthened to 8.9%, largely due to better performance from MPM (improved product mix) and ILF (higher ex-farm price and lower feed cost).
Both ROE and ROA measures have been on the uptrend as well. QL enhanced its ROE from 17.3% in FY03 to 22.7% in FY05. ROA increased from 4.8% to 7.5% in the same period. Cash conversion cycle too, strengthened from an estimated 64 days in FY03 to c. 50 days in FY05. Net gearing however, is slightly on the high end, at 1.4x as at FY05, further reduced to 1.3x in 3QFY06. Bulk of the borrowings is short term in nature, in the form of bills payables used for trade purposes.
While ILF contributed 64% of group revenue in FY05, PBT contribution is smaller at 33% due to nature of the business which generally has thinner margin. MPM made up bulk of profit at 44% in FY05.
4. Earnings Outlook
Expects continued growth in surimi consumption
Key growth from MPM division. Expected growth in surimi subdivision is underpinned by 1) continued growth in the consumption of surimi and surimi-based products; 2) reduction in supplies from Thailand (key exporter of surimi worldwide) due to tsunami which affected catch and fishing fleet; 3) higher capacity from the expansion of frozen product manufacturing at its Hutan Melintang plant (estimated capex RM16m).
QL is also actively increasing its deep-sea fishing licenses to expand its operations. The group recently acquired 100% of Rikawawasan Sdn. Bhd. for RM30,000.00 which provided QL 3 additional deep-sea fishing licenses.
Lower raw materials cost, higher ex-farm prices
Higher margins in poultry sector. The ILF division is expected to post improved performance this year on the back of favourable operating environment – lower feed cost (due to lower corn and soybean prices), higher ex-farm ceiling price of RM4/kg and the bird-flu status.
Palm kernel expeller to substitute animal feed?
Bio-PKE project. Through a joint-venture (JV) with Agrobiocare Sdn. Bhd. since April 2005, QL is currently undertaking the viability of commercial manufacture and sale of biologically digested feeding raw material. Using Korean technology, the JV converts palm kernel expeller (PKE), a by-product of CPO milling, into animal feed, hence substituting the more expensive corn and soybean which are subject to commodity fluctuation. As the project is still at testing phase, we have not taken any contribution from this venture into our projection.
5. Recent Developments
Offered a minority stake in KPNB
Participation in national fisheries consortium. QL is participating in a national fisheries consortium called Konsortium Perikanan Nasional Berhad (KPNB) which was set up recently by the Ministry of Agriculture and Agro-based Industry to manage, operate and oversee the integrated activities of deep-sea fishing, marketing and distribution and fish processing. KPNB will be operating no less than 50 vessels and deep sea fishing is expected to contribute 80% of KPNB’s profits.
We view QL’s participation in the consortium as a positive development, and expect QL to benefit from this national project in the long term.
However, as QL’s participation is limited to a minority stake at this point of time and sketchy details on KPNB and its mechanism todate, we have not factored in contribution from this development in our forecast.
Private placement at RM2.47 per share, raised RM49.4m
Private placement exercise. The Group has completed a 1:3 bonus issue exercise in October 2005, which increased its share outstanding from 150m to 200m shares. Subsequently, QL has also completed a private placement exercise which further increased its shares outstanding to 220m. Priced at RM2.47 per share, the exercise raised RM49.4m, with proceeds to be used for repaying bank borrowings and working capital.
6. Investment Risk
Stiff competition from Thailand. Despite QL’s remarkable claim as Asia’s largest surimi producer, competition is stiff and there are a number of big players in the industry. Strong players in Asia are the Thai and Japanese companies. It will not be an easy feat to maintain QL market share while keeping its competitors at bay.
Commodity fluctuation. QL’s ILF and CPO Milling divisions deals with commodities, and as such are susceptible to fluctuation in commodity pricing. In addition, selling price of eggs and broilers are controlled by government who impose a ceiling price, hence rendering little space to maneuver, especially during times of rising commodity price.
Bird flu issues. Government states that the bird flu incidents has so far been under control and limited to the three affected states – Selangor, Perak and Penang (none of QL farms is in these states). In fact, Malaysia expects to be declared free of bird flu soon as there has been no fresh cases report in recent days. However, should the unlikely event of an outbreak takes place, QL would be impacted.
7. Balance Sheet (skip)
8. Valuation
We view MPM and ILF as the key contributors to QL’s profit in the
months, and therefore, we have selected companies from
production sector and the poultry sector as the Group’s peers.
Thai peers in marine products business
For MPM, we picked the following Thai companies as there are no close listed peer in Malaysia, plus Thailand is a major exporter of frozen seafood products (including surimi) in the world:
Considering MPM contributes the largest portion to Group profit and it holds promising outlook, we view pegging our EPS07f to its regional MPM peers of 12.4x as fair and appropriate. This is also roughly in line with QL’s historical 3-year average PER of 12.9x.
Fair value at RM3.03
Pegging QL’s EPS07f of 24.4sen (EPS accounted for the proposed 20m private placement shares) to PER of 12.4x yields a fair value of RM3.03.
9. Recommendation
Initiate with BUY call
We like QL for 1) its capable management, 2) healthy fundamentals backed by good track record, 3) clear growth plans, and 4) potential upside surprise from its biotech ventures and participation in the fisheries consortium.
We are initiating our coverage on QL with a BUY call and a fair value of RM3.03, representing a potential upside of 15.2%.
Analyst: Nicole Tan Yoke Ping (nicole@zj.com.my)
filed:QL_20060403_IR.pdf
complete report found on ZJ advisory
1. Investment Highlights / Summary
• Well diversified company with remarkable track record. QL’s business activities are diversified in the marine products, palm oil and integrated livestock industry. QL’s business activities are in line with Malaysia’s National Agriculture Plan and receive attractive tax incentives. QL is currently the largest producer of surimi in Asia and largest distributor of animal feed and surimi-based products manufacturer in Malaysia.
• Continued growth in marine products. QL is expanding its frozen surimi processing plant in Hutan Melintang to meet the increasing demand for surimi, as well as expanding its deep-sea fishing activities.
• Potential in national fisheries project. QL’s participation in the national fisheries consortium (KPNB) is a positive development, although the stake is small and details are still sketchy at the moment.
• Risks. QL’s marine and livestock businesses are susceptible to fluctuation in commodity prices. Furthermore, selling price of livestock products are controlled by Government who imposed a ceiling price. Adverse effect would be inflicted on its poultry segment in the unlikely event of a major bird flu outbreak in Malaysia.
• Initiate coverage with BUY call at RM3.03 fair value. We pegged QL’s EPS07f of 24.4 against 12.4x average PER of its regional peers in Thailand involved in marine products manufacturing business.
2. Background
Business in marine products, CPO milling & livestock farming
Corporate profile. A diversified Malaysian agricultural resource-based group, QL Resources Berhad (QL) and its subsidiaries are involved in marine products manufacturing, crude palm oil milling and integrated livestock farming.
Founded in 1987 by Mr. Chia Song Kun and other family members as a family business involved in small scale trading of marine-based products, it has since grown to become a resource-based corporation. QL was listed on the Second Board of Bursa Malaysia in March 2000, and Its listing was subsequently transferred to the Main Board in January 2002.
Largest surimi producer in Asia
Currently, management states that QL is the largest producer of surimi in Asia and largest fishmeal and surimi-based products manufacturer in Malaysia. All divisions are profitable and have been recording a turnover CAGR of 18% and profit after tax CAGR of 23% since its listing in 2000.
QL is one of the five companies invited by the Ministry of Agriculture and Agro-based Industry to join the national fisheries consortium called Konsortium Perikanan Nasional Berhad (KPNB) which was set up in October 2005.
Business. QL is involved in three main strategic business units:
i) Marine Products Manufacturing (MPM)
Surimi and surimi-based products manufacturer. QL manufactures surimi (semi processed raw fish paste / de-boned fish meat which has been washed and frozen) and surimi-based products such as fishballs and fishcakes. Surimi is sold to other food manufacturers for further processing while surimi-based products are sold to end-consumers under its own brand names of “Double Shark”, “Double Dolphin”, “Mushroom” and “Top 1”.
40% of QL’s surimi is exported to Japan, Korea and Singapore whereas 10% of surimi-based products are exported to Singapore, Brunei and Australia. The remaining is for local consumption. Management estimates it has 25% market share locally for surimi/surimi-based products.
The Group currently operates 3 fish processing plants in Hutan Melintang in Perak, Endau in Johor and Tuaran in Sabah.
Fishmeal manufacturer. QL is Malaysia’s largest manufacturer of fishmeal which is a high protein fish-based animal feedstuff with a local market share of 30%. Fishmeal is made from the innards, scales, heads, bones and skin of fish not used to produce surimi. 70% of fishmeal is exported to China, Sri Lanka and Vietnam.
Deep-sea fishing. QL has 18 deep sea fishing licenses and operates 7 deep-sea fishing trawlers. These trawlers cost approximately RM1 million each. Deep sea fishing refers to fishing activities beyond 30 nautical miles offshore into the Exclusive Economic Zone and the international waters using vessels with a minimum capacity of 70 gross registered tonnes.
ii) Crude Palm Oil Milling (CPO Milling)
Palm oil plantation and mill. QL operates a 3,000 hectare oil palm plantation and two independent crude palm oil mills in Tawau, Sabah.
iii) Integrated Livestock Farming (ILF)
Distribution of animal feed raw materials. QL is the leading distributor of animal feed meal raw materials such as corn and soya bean meal in Malaysia, making up 18% of the Malaysian market share.
Broiler and layer farms. QL operates broiler farms (for meat) and layer farms (for eggs). Almost 70% of QL’s poultry activities are located in Sabah, East Malaysia. QL’s poultry layer farms in Negeri Sembilan, Kuching, Kota Kinabalu and Tawau produce approximately 800,000 eggs a day, making QL the leading poultry egg producer in Malaysia. QL’s broiler farms in Tawau, Sabah are known to be the leading integrated broiler producer in the Sabah state.
3. Financial Highlights
5-year turnover CAGR of 18%;profit CAGR of 22%
QL has a set of impressive financial track record. Since listing, the Group recorded a healthy turnover and net profit 5-year CAGR of 18% pa and 22% pa respectively. MPM posted highest profit CAGR at 30% followed by CPO milling (24%) and ILF (12%).
Improving margin, higher ROE
QL group’s EBITDA margin has been improving for the past several years, from 7.0% in FY04 to 7.6% in FY05. Cumulative 9-month EBITDA further strengthened to 8.9%, largely due to better performance from MPM (improved product mix) and ILF (higher ex-farm price and lower feed cost).
Both ROE and ROA measures have been on the uptrend as well. QL enhanced its ROE from 17.3% in FY03 to 22.7% in FY05. ROA increased from 4.8% to 7.5% in the same period. Cash conversion cycle too, strengthened from an estimated 64 days in FY03 to c. 50 days in FY05. Net gearing however, is slightly on the high end, at 1.4x as at FY05, further reduced to 1.3x in 3QFY06. Bulk of the borrowings is short term in nature, in the form of bills payables used for trade purposes.
While ILF contributed 64% of group revenue in FY05, PBT contribution is smaller at 33% due to nature of the business which generally has thinner margin. MPM made up bulk of profit at 44% in FY05.
4. Earnings Outlook
Expects continued growth in surimi consumption
Key growth from MPM division. Expected growth in surimi subdivision is underpinned by 1) continued growth in the consumption of surimi and surimi-based products; 2) reduction in supplies from Thailand (key exporter of surimi worldwide) due to tsunami which affected catch and fishing fleet; 3) higher capacity from the expansion of frozen product manufacturing at its Hutan Melintang plant (estimated capex RM16m).
QL is also actively increasing its deep-sea fishing licenses to expand its operations. The group recently acquired 100% of Rikawawasan Sdn. Bhd. for RM30,000.00 which provided QL 3 additional deep-sea fishing licenses.
Lower raw materials cost, higher ex-farm prices
Higher margins in poultry sector. The ILF division is expected to post improved performance this year on the back of favourable operating environment – lower feed cost (due to lower corn and soybean prices), higher ex-farm ceiling price of RM4/kg and the bird-flu status.
Palm kernel expeller to substitute animal feed?
Bio-PKE project. Through a joint-venture (JV) with Agrobiocare Sdn. Bhd. since April 2005, QL is currently undertaking the viability of commercial manufacture and sale of biologically digested feeding raw material. Using Korean technology, the JV converts palm kernel expeller (PKE), a by-product of CPO milling, into animal feed, hence substituting the more expensive corn and soybean which are subject to commodity fluctuation. As the project is still at testing phase, we have not taken any contribution from this venture into our projection.
5. Recent Developments
Offered a minority stake in KPNB
Participation in national fisheries consortium. QL is participating in a national fisheries consortium called Konsortium Perikanan Nasional Berhad (KPNB) which was set up recently by the Ministry of Agriculture and Agro-based Industry to manage, operate and oversee the integrated activities of deep-sea fishing, marketing and distribution and fish processing. KPNB will be operating no less than 50 vessels and deep sea fishing is expected to contribute 80% of KPNB’s profits.
We view QL’s participation in the consortium as a positive development, and expect QL to benefit from this national project in the long term.
However, as QL’s participation is limited to a minority stake at this point of time and sketchy details on KPNB and its mechanism todate, we have not factored in contribution from this development in our forecast.
Private placement at RM2.47 per share, raised RM49.4m
Private placement exercise. The Group has completed a 1:3 bonus issue exercise in October 2005, which increased its share outstanding from 150m to 200m shares. Subsequently, QL has also completed a private placement exercise which further increased its shares outstanding to 220m. Priced at RM2.47 per share, the exercise raised RM49.4m, with proceeds to be used for repaying bank borrowings and working capital.
6. Investment Risk
Stiff competition from Thailand. Despite QL’s remarkable claim as Asia’s largest surimi producer, competition is stiff and there are a number of big players in the industry. Strong players in Asia are the Thai and Japanese companies. It will not be an easy feat to maintain QL market share while keeping its competitors at bay.
Commodity fluctuation. QL’s ILF and CPO Milling divisions deals with commodities, and as such are susceptible to fluctuation in commodity pricing. In addition, selling price of eggs and broilers are controlled by government who impose a ceiling price, hence rendering little space to maneuver, especially during times of rising commodity price.
Bird flu issues. Government states that the bird flu incidents has so far been under control and limited to the three affected states – Selangor, Perak and Penang (none of QL farms is in these states). In fact, Malaysia expects to be declared free of bird flu soon as there has been no fresh cases report in recent days. However, should the unlikely event of an outbreak takes place, QL would be impacted.
7. Balance Sheet (skip)
8. Valuation
We view MPM and ILF as the key contributors to QL’s profit in the
months, and therefore, we have selected companies from
production sector and the poultry sector as the Group’s peers.
Thai peers in marine products business
For MPM, we picked the following Thai companies as there are no close listed peer in Malaysia, plus Thailand is a major exporter of frozen seafood products (including surimi) in the world:
Considering MPM contributes the largest portion to Group profit and it holds promising outlook, we view pegging our EPS07f to its regional MPM peers of 12.4x as fair and appropriate. This is also roughly in line with QL’s historical 3-year average PER of 12.9x.
Fair value at RM3.03
Pegging QL’s EPS07f of 24.4sen (EPS accounted for the proposed 20m private placement shares) to PER of 12.4x yields a fair value of RM3.03.
9. Recommendation
Initiate with BUY call
We like QL for 1) its capable management, 2) healthy fundamentals backed by good track record, 3) clear growth plans, and 4) potential upside surprise from its biotech ventures and participation in the fisheries consortium.
We are initiating our coverage on QL with a BUY call and a fair value of RM3.03, representing a potential upside of 15.2%.
Analyst: Nicole Tan Yoke Ping (nicole@zj.com.my)
filed:QL_20060403_IR.pdf
complete report found on ZJ advisory
14 May 2008
沙比利阿末：供應緊縮‧棕油價今年杪或上探4500令吉
记得上个月有专家估计cpo的底部会在RM3000建立，怎么突然冒出RM4500来？炒家和专家都是同人。
-----------------------------
預期大馬衍生產品交易所原棕油期貨料於上半年上探每公噸4000令吉的歷史新高，下半年若出現反常氣候，更有望進一步推高棕油價至4500令吉。
下半年若出現反常氣候‧棕油價有望走高至4500
沙比利阿末在原棕油大會後表示：“基於供應緊縮，從現在至6月，原棕油行情將維持上升趨勢，上探每公噸4000令吉，下半年若氣候出現反常，則料超越4000令吉水平。”
他對記者追問原棕油價是否有望站上4500令吉水平時，點頭表示有此可能性。
沙比利阿末披露：“原棕油需求的基礎面已改變，使得價格基準跟著改變，未來我們將不會再回到每公噸2000令吉的水平，至少是未來5至10年。”
同樣出席大會的Godrej國際分析員密斯提則認為，原棕油價格料在暑假期間超越每公噸4000令吉，若氣候反常，則有望於今年9月至明年2月期間上探每公噸4500令吉。
他指出：“中國、印度、俄羅斯、中東等國家，強穩的經濟成長，使他們對原棕油的消耗量繼續成長，料使得原棕油價格於未來數年維持高水平。”
生物燃油使用進度重整‧或減低原棕油需求
另一方面，食用油預測機構油世界（Oil World）分析員湯姆斯雖然看好食用油價格將於中期內繼續走揚，惟認為歐盟、德國等國或重整生物燃油的使用進度，進而減低原棕油的需求，料拖累原棕油行情。
他說：“我們預估今年的平均原棕油價格落在1120美元（約3598令吉），相信現有價格已相當接近高峰，若原棕油價上探每公噸4000令吉水平，料不持久。”
紐約保誠金融分析員安費克則認為大馬原棕油價格料於4月上探每公噸4300令吉。
她說：“芝加哥交易所的大豆油7月期貨料於同期內在每磅68至72美仙之間交易。”
大豆油價格料高企
大馬衍生產品交易所原棕油5月期貨25日站上每公噸3914令吉的歷史新高，今日早盤則以3820令吉作收。芝加哥交易所大豆油7月期貨隔夜則以每磅65.63美仙掛收。
安費克指出：“目前大豆油的存貨仍處於低水平，大豆油價格料在需求持穩下高企。”
星洲日報／財經‧2008.02.27
-----------------------------
預期大馬衍生產品交易所原棕油期貨料於上半年上探每公噸4000令吉的歷史新高，下半年若出現反常氣候，更有望進一步推高棕油價至4500令吉。
下半年若出現反常氣候‧棕油價有望走高至4500
沙比利阿末在原棕油大會後表示：“基於供應緊縮，從現在至6月，原棕油行情將維持上升趨勢，上探每公噸4000令吉，下半年若氣候出現反常，則料超越4000令吉水平。”
他對記者追問原棕油價是否有望站上4500令吉水平時，點頭表示有此可能性。
沙比利阿末披露：“原棕油需求的基礎面已改變，使得價格基準跟著改變，未來我們將不會再回到每公噸2000令吉的水平，至少是未來5至10年。”
同樣出席大會的Godrej國際分析員密斯提則認為，原棕油價格料在暑假期間超越每公噸4000令吉，若氣候反常，則有望於今年9月至明年2月期間上探每公噸4500令吉。
他指出：“中國、印度、俄羅斯、中東等國家，強穩的經濟成長，使他們對原棕油的消耗量繼續成長，料使得原棕油價格於未來數年維持高水平。”
生物燃油使用進度重整‧或減低原棕油需求
另一方面，食用油預測機構油世界（Oil World）分析員湯姆斯雖然看好食用油價格將於中期內繼續走揚，惟認為歐盟、德國等國或重整生物燃油的使用進度，進而減低原棕油的需求，料拖累原棕油行情。
他說：“我們預估今年的平均原棕油價格落在1120美元（約3598令吉），相信現有價格已相當接近高峰，若原棕油價上探每公噸4000令吉水平，料不持久。”
紐約保誠金融分析員安費克則認為大馬原棕油價格料於4月上探每公噸4300令吉。
她說：“芝加哥交易所的大豆油7月期貨料於同期內在每磅68至72美仙之間交易。”
大豆油價格料高企
大馬衍生產品交易所原棕油5月期貨25日站上每公噸3914令吉的歷史新高，今日早盤則以3820令吉作收。芝加哥交易所大豆油7月期貨隔夜則以每磅65.63美仙掛收。
安費克指出：“目前大豆油的存貨仍處於低水平，大豆油價格料在需求持穩下高企。”
星洲日報／財經‧2008.02.27
09 May 2008
standard & poor rate leweko to sell
12-Month Target Price: MYR1.27
Date: May 8, 2008
Summary: Leweko is an integrated timber group with upstream forest concessions and downstream manufacturing of sawn timber, moulded timber and other timber products. The group also owns 998 hectares of oil palm plantations.
Analyst: Siti Rudziah Salikin
Highlights
--------------
• Prices of Malaysian timber products in Europe, which is Leweko main export market, have started to pick up. However, the sustainability of the price recovery is clouded by uncertainty over the severity of the slowdown in the Eurozone economy and the housing market.
• Tight log supply will keep log prices high. Operating margins will be pressured if the weak demand from Europe is prolonged, making it difficult to pass on the cost increases to customers, in our opinion. Leweko has not resumed log harvesting at its own concessions, thus our forecasts assume its log requirements will be sourced externally.
• As timber earnings dropped, the plantation division became a significant earnings contributor in 2007, accounting for 50% of group pre-tax profit. We expect this trend to continue in 2008 on the strength of palm oil prices, which will cushion our projected lower profitability
for the timber operations. We raise our projected palm fruit output following the strong 1Q08 harvest and revised upwards our net profit for 2008 and 2009 by 3.3% and 2.5%, respectively.
Investment Risks
-------------------
• Risks to our recommendation and targe price faster-than-expected
economic growth in the Eurozone and thus a more resilient housing market, as well as higher-than-expected selling prices for timber and palm oil.
Recommendation
--------------------
• We maintain our Sell call on Leweko with an unchanged 12-month target price of MYR1.27.
• The stock currently trades at a 2008 PER of 9.6x, which we believe is about fair, given the uncertain outlook of its timber operations. From the plantation sector’s perspective, we also believe the positive earnings outlook has already been factored into the share price given that small plantation stocks currently trade at single-digit forward multiples. We have also lowered our projected dividend for 2008 to 5 sen (from 9 sen) to be in line with the company’s historical dividend payout of less than 40%.
• We continue to value the Leweko at 9x PER (which is the stock’s two year average PER) on projected 2008 earnings and add our projected dividend to arrive at the target price.
• Leweko has proposed: (i) a 1-for-20 bonus issue; and (ii) a share split of every one share (after the proposed bonus issue) of MYR1.00 each into two shares of 50 sen each. The exercise will increase Leweko’s share capital to 241.7 mln and should help to improve the share’s trading liquidity.
• From its 2006 annual report, we note that there was no mention of any corporate social responsibility (CSR) activities that may have been undertaken by the group during the year.
Business Review
-------------------
Perak-based Leweko is involved in timber and oil palm plantation businesses. Leweko owns an integrated timber operation, with both upstream forest concessions and logging businesses, and downstream timber manufacturing and processing activities. On the plantation side, Leweko is involved in upstream oil palm cultivation and selling fresh fruit bunches (FFB) in the domestic market.
The timber division was impacted by the industry downturn in 2007 Leweko’s forest concessions in Temengor Forest Reserve in Perak have about 2,000 hectares (ha) remaining. About 70% of logs harvested from its own concessions are for internal use and the rest sold in Peninsular Malaysia (logs from Peninsular Malaysia are not allowed to be exported).
In addition, Leweko has a long-term agreement with other concession holders to purchase logs from their concessions of about 2,000 ha. These will assure supply of logs for its downstream operations for the next 5-7 years.
The sawmilling, kiln-drying and timber moulding activities are carried out at Leweko’s 8.69 ha timber processing complex in Grik, Perak. Its main products are sawn timber and moulded timber, which include floor boards, decking boards, skirtings, casings and laminated woods. Initially, most of the timber products were sold locally but in the past three years, Leweko has aggressively expanded its exports. By 2007, export contribution to Leweko total revenue has grown to 41.5% or MYR50.8 mln compared with 6.7% of MYR8 mln in 2004. Europe is its major market, accounting for 83.3% of export revenue for 2007.
The timber industry, in general, performed poorly in 2007 as the real estates and construction industries (which are a good demand barometer for the timber industry) in major export markets cooled down. This was reflected in the 27.1% YoY decline in Leweko’s net profit for the year. The profit would have been much lower if not for increased earnings contribution from the plantation division.
Following the very strong first half of 2007, the markets for timber products became oversupplied. Together with the housing sector weaknesses in Japan (largely attributed to the impact of the revised Building Standards Act, which caused housing starts to plummet), the U.S. (caused by the sub-prime mortgage crisis) and Europe (due to high interest rates), prices of timber products declined throughout 2H2007. Log prices, however, were quite resilient due to limited supply.
Leweko’s logs and timber products division recorded a 74.4% YoY drop in pre-tax profit in 2007 to MYR5.5 mln. Leweko was able to grow its export revenue by 46.9% YoY in 2007 (helped by the introduction of new products, such as laminated scantlings) but domestic sales faltered along with the industry’s weakness. Margins were squeezed to a single-digit level on high log prices and fuel costs. The strengthening of MYR against US$ also contributed to the low profitability.
The oil palm businesses, on the other hand, had a good year in 2007 estates with a total area of 998 ha (of which, 961 ha are planted). The estates produced 31,322 tons of fresh fruit bunches (FFB) in 2007. Its FFB yield of 32.6 tons/ha is relatively high (the average yield for the state
of Perak was 21.2 tons/ha while that for the country was 19 tons/ha). This reflects the estates’ prime production age of between 11 and 15 years. The plantations had a good year in 2007. Due to the rise in palm oil prices, pre-tax profit for the plantation division surged 2.8x YoY to MYR9.8 mln. The average FFB selling price increased 63.3% YoY to about MYR482/ton and outweighed the 11.7% YoY rise in production costs to MYR200/ton. With lower earnings from its timber operations, plantations became a significant earnings contributor in 2007, accounting for 50% of group pre-tax profit versus 12.9% in 2006.
Earnings Outlook
--------------------
We expect the plantation division to remain a major contributor to Leweko’s earnings in 2008.
The weak demand for and prices of timber products continued into 1Q2008 while production costs have risen further.
These are expected to drag down timber earnings for the quarter.
The demand factor will determine earnings prospect going forward.
Demand for Malaysian timber products from Europe has started to pick up with marginal increases in prices.
The small recovery could be attributed to seasonal pick-ups in construction activities as the spring/summer seasons approach, in our opinion.
The sustainability of the price recovery is uncertain given the projected slowdown in the Eurozone economy.
The European Commission has reduced its 2008 economic growth forecast for the Eurozone to 1.7% and projects the growth to slow down further to 1.5% in 2009 versus the 2.6% expansion recorded in 2007.
With the European Central Bank keeping interest rates steady to curb inflationary pressure, there are downside risks to the housing market and the economic growth, in our opinion.
A slowdown in demand for timber products from Europe could put a brake on Leweko’s previously strong export growth.
Tight log supply should keep log prices high.
The heavy rainfall in Malaysia and Indonesia has slowed down logging activities and the wet weather is expected to stay at least throughout 2Q2008.
At the same time, supply of (softwood) logs from Russia is declining due to higher export taxes of 25% (effective April 2008) versus 20% previously.
The taxes will increase to 80% in January 2009.
This move, which is intended to boost the country’s domestic wood processing industry, is expected to put upward pressure on log costs given Russia’s 40% share of the global softwood log market and is viewed as a bullish factor for tropical logs.
Our concerns are: (i) decreasing log supply locally will reduce Leweko’s logs trading activities; and (ii) operating margins for its downstream timber processing operations will be under pressure if the weak demand from Europe is prolonged, making it difficult to pass on the cost increases to its customers, in our opinion. While Leweko has its own supply of logs, it has not harvested logs from its concessions since September 2007. Our forecasts assume its log requirements will be sourced from third parties until there is confirmation that a logging permit has been obtained and the in-house logging activities will resume.
In spite of our cautious view on the outlook of timber prices, we are looking at a small decline in Leweko’s 2008 profit. The group’s earnings will be supported by stronger contribution from plantations. FFB production in 1Q08 was strong, rising 24.5% YoY to 8,029 tons with better-than-expected yields. We raise our projected FBB for 2008 and 2009 by 3.2% and 2.6%, respectively. Nonetheless, given the age profile of the trees, we expect limited yield improvement from the 2007 level of 32.6 tons/ha and thus project a marginal output growth for the two years.
Earning growth be fuelled by higher FFB selling price, which we project to be 30% higher YoY in 2008 at MYR610/ton. We raise our projected net profit for 2008 by 3.3% and for 2009 by 2.5%
following the upward adjustment to plantation profit.
Valuation
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The stock currently trades at a 2008 PER of 9.6x, which we believe is about fair, in view of the uncertain outlook for its timber division. From the plantation sector’s perspective, we also believe the positive earnings outlook has already been factored into the share price given that small plantation stocks currently trade at single-digit forward multiples. We have also cut our projected dividend for 2008 to 5 sen (from 9 sen) to be in line with the company’s historical payout of less than 40%.
We continue to value Leweko at 9x PER, which is the stock’s average PER for the past two years, and assign the multiple to our projected EPS for 2008. We add our revised dividend of 5 sen per share to the stock’s intrinsic value, which is now higher at MYR1.22 due to the earnings revision, and maintain our 12-month target price of MYR1.27.
Leweko has proposed: (i) a 1-for-20 bonus issue, and (ii) a share split involving a subdivision of every one share after the proposed bonus issue of MYR1.00 each into two shares of 50 sen each. The exercise will increase Leweko’s share capital to 241.75 mln and should help to improve the share’s trading liquidity but will not have an impact on our valuation.
Recommendation and Target Price History
Date Recommendation Target Price
4-Mar-08 Sell 1.27
4-Sep-07 Buy 1.77
1-Jun-07 Buy 1.95
26-Mar-07 Buy 2.10
4-Dec-06 Hold 1.82
7-Nov-06 Hold 1.70
30-Aug-06 Buy 1.45
2-Mar-06 Buy 1.65
8-Aug-05 Buy 1.69
filed:Leweko 080508 update.pdf
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