Dutaland may use RM750m from plantation sale to inject into property

KUALA LUMPUR: Dutaland Bhd's sale of its 11,579ha oil palm estate in Sabah may finally give the embattled company the breathing space it needs to rejuvenate its operations, especially as it has land bank in Kuala Lumpur.

The sale of the estate for RM750mil to Boustead Plantations Bhd came as timely news to investors.

On Thursday, Dutaland's share price rose to a near three-year high of 65 sen, which is a 53.7% gain year-to-date.

To recap, in the first quarter ended March 31, 2017, it posted net losses of RM3.69mil on the back of revenue of RM10.74mil.

In its financial year ended June 30, 2016, Dutaland posted revenue of RM37.8mil for FY2016, which was about 4.5% of its paid-up capital of RM846.12mil.

The lack of operations meant that Dutaland triggered the criteria of paragraph 8.03A(2) of the Main Market Listing Requirements as the group’s revenue was 5% or less of its paid-up capital based on its unaudited financial results for 2016.

On Aug 29, 2016, the group submitted a filing to Bursa Malaysia requesting a waiver from being classified as an affected listed issuer.

Dutaland was given a waiver as its plantations segment had been impacted by the El Nino phenomenon, which caused a decline in the production of fresh fruit bunches. 

The stock exchange also apprised that Dutaland's property division was adversely affected by market conditions and the tightening of financing facilites by banks, leading to softer demand.

The company had also announced plans to improve the group's financial performance, including the launching of a new commercial project at the Oakland Commercial Center in Seremban, and the review of business plans for the Kenny Heights project in Sri Hartamas/Mont Kiara as well as the Duta Grand Hotel mixed-development in Kuala Lumpur. 

At the time, the group had said that it planned to evaluate a proposal to construct a palm oil mill at its 11,978-hectare oil plam estates in Sandakan, Sabah.

At the time of this announcement, a deal for the sale of the aforementioned plantation land with IOI Corp Bhd had fallen through. The deal, which was worth RM830mil, was scrapped with IOI citing that Dutaland had not complied with certain terms and conditions. 

The proposed land sale to Boustead Plantations's unit Rimba Nilai Sdn Bhd for RM750mil, is for a smaller tract of 11,579 hectares, albeit in the same location.

According to a statement issued by Boustead, the purchase presented an opportunity to expand its land bank to complement its existing operations in Sabah.

With the sale of the 11,579 hectare tract, Dutaland would have now disposed of almost the entirety of its plantation land holdings.

According to its 2016 annual report, the group also holds mixed-development land totaling 3.47 acres with a net book value of RM354.21mil all of which are in Kuala Lumpur.

It can now redirect its attention to its property development division, which recorded a loss of RM4.3mil in its first quarter ended March 31, 2017, owing to a lack of development activities. 

At the time of writing, the stock is trading one sen or 1.6% lower at 61.5 sen on volume of 24.93 million shares.