THE proposal to list the Federal Land Development Authority (Felda) on the KLSE has created a lot of excitement in the plantation industry.
Felda Holdings Sdn Bhd is best described as Malaysia's largest plantation owner, with an estimated 811,140ha.
Its unit Felda Plantations Sdn Bhd, which has about 353,000ha, also manages Felda settlers' land estimated at over 300,000ha. Felda's rubber land bank is 149,444ha, sugar cane 4,663ha, cocoa 1,567ha and others 282,000ha.
While we are not sure which Felda unit will be listed (Felda Holdings or Felda Plantations), the move will definitely result in the creation of another plantation giant in Malaysia and also one of the world's biggest oil palm plantation groups, a plantation industry player said.
With the proposed listing exercise, he said Felda was set to join the ranks of other major plantation companies like Golden Hope Plantations Bhd, IOI Corp Bhd, Kumpulan Guthrie Bhd and Kuala Lumpur Kepong Bhd (KLK).
After Felda, he said Golden Hope came second in terms of plantation land banks estimated at 126,000ha, IOI Corp in third place with 113,000ha while Guthrie and KLK had about 100,000ha each in Malaysia.
Of Felda's 353,000ha, minus its 20% immature plantations, he said Felda had about 280,000ha of matured oil palm plantation able to produce close to one million tonnes of crude palm oil (CPO) per year.
He added that Felda's CPO production alone represented about 9% to 10% of Malaysia's total annual CPO production.
Based on the current average CPO price of RM1,400 per tonne and cost of production of about RM800, he estimated Felda to register a whopping pre-tax profit of about RM600mil this year for its CPO division alone.
This figure, however, excludes the Felda's settlers whose production tend to change constantly due to inefficiency in CPO production management, he said, adding that Felda was also making profits from its other equally competent in palm industries and manufacturing divisions.
The low-profile Felda Holdings is believed to rank as the 18th largest company in Malaysia in terms of turnover and the country's 37th most profitable group.
Prime Minister Datuk Seri Dr Mahathir Mohamad in his Budget 2004 speech said Felda had great potential of becoming an international brand while its shares could join the league of blue chips on the KLSE.
With the listing, Felda would be able to get capitalisation from the market. He said the government would also see returns from the listing, which would benefit the Felda group, settlers, cooperatives and the state government that had provided the land for the development of plantations under Felda.
Over 105,000 Felda settlers are also believed to get the opportunity to hold equity in the listed company as members and individuals.
According to Mayban Securities Bhd plantation analyst Mak Hoy Kean, the proposal is certainly a good move to unlock one of the government's quality assets.
There is a lot of upside potential in listing Felda, which can further improve on its efficiency and productivity and at the same time expand on other palm oil related downstream activities with less dependency on the government's assistance, he said.
Apart from its plantation assets under Felda Plantations and Felda Agricultural Services Sdn Bhd, Felda also has some companies under its palm industries division. These include Felda Palm Industries Sdn Bhd, Felda Kernel Products Sdn Bhd, Felda Bulkers Sdn Bhd and Felda Transport Services - all with specialised areas related to the palm industries.
With the listing, Felda will also be able to invite participation from private sectors to help finance its potentially high profit-generating activities, which in turn will create confidence among investors, added Mak.
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