KUB sees robust growth led by plantation business

Company highlights: (from left) KUB non-executive director Tunku Alizan Muhammad Alias, Abdul Rahim, chairman Datuk Ahmad Ibni Hajar and independent non-executive director Datuk AB Rahim Abu Bakar at the AGM.

KUALA LUMPUR: KUB Malaysia Bhd expects to achieve a lower double-digit growth in earnings this year on robust expansion in its plantation and energy businesses.

Last year, its net profit grew to RM22.5mil from RM7.8mil in 2015.

“I expect earnings to grow in the range of lower double digit for this year on the back of the energy and plantation expansion.

“Our plantation business had a drag due to mill operations last year and we have rectified it already.

“We expect production to improve this year, coupled with crude palm oil price average, which will be better this year as compared to last year,” said president and group managing director Datuk Abdul Rahim Mohd Zin.

Speaking after the company’s AGM, he said: “For this year, the bulk of KUB’s capital expenditure (capex) would be for the group’s proposed acquisition of a 1,534ha brownfield oil palm plantation land in Sungai Kinabatangan, Sabah, for about RM100mil.”

On its liquefied petroleum gas (LPG) business in Westports, Abdul Rahim said KUB is making several plans to improve the supply and distribution of the LPG.

“One of those initiatives that we are already doing is building a dedicated pipeline that will cost us around RM2.5mil for our terminal in Westports.

“We are also reviewing the identification of new dealers and partners to expand our network with an allocation of RM8mil,” he said.

On its food segment through A&W Malaysia Sdn Bhd, Abdul Rahim admitted that it is a very competitive business, and KUB still remained quite neutral on the outlook.

“We have invested a lot of money and will still expand accordingly as per the development agreement to open new stores,” he said.

He said the company had to preserve the value of the food business by continue investing in new stores in compliance to the agreement.

“By the end of June, we will have 35 stores, and then add another eight stores in the following year and another nine stores after that with a total budget allocation of about RM25mil.”

He said the company had obtained several proposals to acquire A&W and it was evaluating them.

“It all depends on the right price and we have to make a call to continue in this business or invest in other sectors with higher returns,” he said.