Hap Seng to buy land in Sabah and Sarawak

Hap Seng to buy land in Sabah and Sarawak

KUALA LUMPUR: Hap Seng Plantations Holdings Bhd, en route to a main board listing, aims to increase its land bank by 50% in “the next couple of years”, said managing director Edward Lee.

“In line with this, the company is in talks with a few parties to purchase plantation land in Sabah and Sarawak,” Lee said at the company's prospectus launch yesterday.

The company's plantation land bank at present is predominantly in Sabah.

Hap Seng Plantations, via wholly-owned subsidiaries Jeroco Plantations Sdn Bhd and Hap Seng Plantations (River Estates) Sdn Bhd, has a total of 37,630ha plantation land in Sabah.

It would look towards a 100% increase in land band after achieving 50% growth, Lee said, adding that he did not rule out the possibility of buying land in Indonesia.

Hap Seng Plantations is the listing vehicle for the plantation assets of main board-listed Hap Seng Consolidated Bhd as part of a restructuring exercise.

Lee said the new company's core competency was its efficiency due to its plantation land, consisting of one contiguous block, “which enhances management, cost efficiency and operational effectiveness.”

Of its total land bank, 32,695ha are planted with oil palm.

“When it comes to managing our plantation assets, what matters to us most is efficiency,” Lee said.

For the financial year ended Jan 31, 2007 (FY07) Hap Seng Plantations' crude palm oil yield was 5.55 tonnes per ha compared with the Malaysian average of 3.93 tonnes per ha for calendar year 2006.

The company hoped to increase this yield to six tonnes per ha in two to three years to be comparable with the highest in the industry, Lee said.

In terms of fresh fruit bunches, Hap Seng Plantations was able to produce yield per mature area of 25.37 tonnes for FY07, which was one of the highest in the country, he added.

The initial public offering (IPO) consists of 300 million shares, comprising an offer for sale of up to 250 million shares by Hap Seng Consolidated and a public issue of 50 million new shares in Hap Seng Plantations.

The IPO price is RM2.65 per share.

The public issue is expected to raise gross proceeds of RM132.5mil, of which RM123.5mil would be used for part repayment of bank borrowings.

This is expected to reduce gearing ratio to 0.1 time from 0.19 time.

Hap Seng Plantations aims for a listing by mid-November.