PETALING JAYA: Rubberwood furniture manufacturer Sand Nisko Capital Bhd (SNC) expects to return to profitability in the financial year ending Dec 31, 2021 (FY21), led by its recently commenced plantation logs business in Kelantan.
In January 2021, SNCâs wholly owned subsidiary Len Cheong Industries Sdn Bhd (LCI) entered into a joint-venture agreement with Integrated Biogranix Ventures Sdn Bhd to harvest existing secondary forest logs on permanent forest reserves in Kelantan, involving 5,434 hectares (13,445 acres). LCI is entitled to 30% of net profit under the terms of the agreement.
SNC managing director Emily Sow Mei Chet said the group has been busy setting up the infrastructure, logistics and relevant licence arrangement since the first quarter of this year, and it envisaged that the operations would be able to commence in 2021. The species mix of trees in the area is about 65% hard wood (40% meranti, 25% combination of keruing, kempas, kelat) with the remaining 35% being medium and light wood.
âOur goal is to finish harvesting at least 1,500â2,000 acres before the end of FY22, before starting the cultivation of the eucalyptus species,â she said in a statement today.
All the logs harvested will be sold to domestic downstream players to produce sawn timber, and the harvesting of existing forest logs will keep the group busy for the next five years.
SNC is targeting revenue averaging above RM10 million annually. This augurs well for the groupâs strategy to turn around in the coming years, although the targeted time frame may be subject to some uncertainty due to the current Covid-19 pandemic restrictions.
After the completion of harvesting of the secondary forest trees, both parties will cultivate, terrace, plant and harvest eucalyptus trees and/or engage in agroforestry on the land. LCI is entitled to 70% of the net profit under the terms of the eucalyptus and agroforestry agreement.
The harvested eucalyptus trees will be sold to companies involved in the production of plywood.
It is estimated that 700 eucalyptus trees can be cultivated on a one-acre plot of land, and each tree can be sold for RM250 after it reaches maturity in the fifth year.
âUpon cultivation of the entire 13,445 acres of land and based on 75% survival rate of the trees, it would generate a revenue of RM1.7 billion, with a net profit margin of around 20%.
âThis project is aimed at bringing our nature back, restoring balance between profitability and forest restoration. Eucalyptus is an effective tree for forest restoration due to its rapid growth and adaptability to the environment. This highly profitable tree species is capable of tolerating severe periodic mentoncarbon moisture stress, low soil fertility and even damages from fire and insects,â Sow said.
