KUB aiming for low double-digit profit growth for 2017

KUALA LUMPUR: KUB Malaysia Bhd, which expects to receive RM20 million from the sale of its non-core assets this year, is aiming for low double-digit profit growth for 2017, driven by its core businesses of energy, agro and information communications technology (ICT).
The group yesterday announced a 44.1% increase in its net profit to RM8.02 million for the first quarter ended March 31, 2017 compared with RM5.57 million in the same quarter a year ago.
Speaking to reporters after KUB’s AGM yesterday, group president and managing director Datuk Abdul Rahim Mohd Zin foresees better average crude palm oil prices this year against 2016, with higher production volume.
Last month, the group announced the acquisition of over 1,534ha of land in Kinabatangan, Sabah, from Kwantas Corp Bhd for RM100.45 million, bringing its total landbank to about 8,800ha.
However, he said more effort will be made to beef up contribution from its ICT segment, which has an outstanding order book of around RM40 million. The group is tendering for RM400 million worth of ICT jobs.
On the energy business, KUB on Monday signed a memorandum of undertanding with Singapore’s Mabanaft Pte Ltd for the development of a refrigerated liquefied petroleum gas terminal at West Port, Pulau Indah, with a capacity of 25,000 tonnes.
Abdul Rahim said this is in line with group’s plans to expand its infrastructure capacity and the investment cost would be around US$70 million to US$80 million (RM300 million to RM343 million).
KUB has the intention of holding a majority stake of at least 51% and the deal is expected to be finalised by year-end.
On the asset disposal exercise, he said RM20 million of non-performing investment properties will be divested this year, in addition to disposals worth RM5 million last year.
Meanwhile, Abdul Rahim, who has a neutral view on the food industry due to high competition, does not rule out the possibility of exiting the local A&W business as long as it fetches the right price.
“We’ve received several proposals for A&W for which we are evaluating. At this point in time though, none of the proposals (are making us want to sell) ... If the right price comes, we’re open to it.
“My rationale is capital rationing. We’ve to make a call whether we can continue this business or invest more in other businesses that can provide better and quicker financial return to us,” he explained.
Regardless of its plans to sell, under its three-year development agreement, Abdul Rahim said the group has to continue investing about RM25 million in new stores over the period. The agreement stipulates 52 outlets by the end of the contract from 35 outlets as at July 2017.
As at end-March, the group’s cash and cash equivalent stood at RM94.73 million.