FGVH to expand landbank in Sabah

LAHAD DATU: Felda Global Ventures Holdings Bhd (FGVH) is looking to expand its plantation landbank in Sabah and is in talks with estate owners, said its group president and CEO Mohd Emir Mavani Abdullah.
In December 2013, a business daily reported that FGV was in negotiations to acquire SPC Biodiesel Sdn Bhd, an "idle" biodiesel plant in Lahad Datu, Sabah. FGVH, however, did not comment on the report then, saying that it was constantly on the lookout for opportunities.
"We want to grow our landbank in Sabah and the team is looking into further acquisitions of brownfield assets in Sabah," he told reporters at a media familiarisation trip to Pontian United Plantations Bhd (PUP) yesterday.
"We are talking to some of the owners of current brownfield estates to see whether they want to join us and become a (part of a) bigger family of FGVH. Some of the smaller estates are quite keen to join us but at the end of the day it all depends on the pricing structure. We want to make sure we get the best deal moving forward," he said.
Emir said plantation land prices have increased. One of the acquisition proposals the company received has a price tag of between RM50,000 and RM55,000 per acre.
"It's challenging. Nevertheless we're still looking around, we're talking because we believe there are going to be some owners who want to join us," he said.
He added that it is also open to joint ventures (JV) with estate owners who can see the benefit of aligning with FGVH. It currently does not have any JVs in the upstream business.
Last October, FGVH completed the RM1.2 billion acquisition of PUP, which gave them an additional 40,000 acres of oil palm plantation.
According to Emir, PUP started contributing to the group's profit in the fourth quarter of 2013.
"Last quarter figures will be released very soon but we will see that at least 20% contribution will come from PUP to group profit this year," he said.
Emir said the group will focus on improving productivity and efficiency this year, and on boosting the profile of its trees next year.
He said it is targeting an average group oil extraction rate (OER) of 21% and average fresh fruit bunch (FFB) production of 25mt/ha.
Emir added that its OER is already at 21% in the last two months while its FFB average is currently at 23 to 24mt/ha.
"Apart from that we're definitely growing, also outside of Malaysia mainly in the palm oil sector in Indonesia and on the rubber sector in Cambodia and also Myanmar. Not forgetting downstream we're also expanding our consumer-based products in Myanmar and Cambodia," said Emir.
He said it has set aside US$5 million (RM16.4 million) to open a rubber mill in Myanmar, which will enable the group to make inroads into upstream rubber operations in that country.
"We have not set any capital expenditure yet for upstream in Myanmar. We're looking at one particular brownfield asset but the situation there is unique, we have to work with local farmers and government to make sure we meet requirements. Hopefully we can close the deal in 12 to 18 months."
Emir said it is already marketing and distributing its consumer products in Myanmar and it is also looking into the sugar sector there.
On the balance of proceeds from its initial public offering exercise, Emir said it is "looking at some deals" which it will announce in the near future after getting board approval.
He added that it is looking at upstream and downstream deals, locally and abroad.