GOLDEN Hope Plantations Bhd expects to achieve at least RM550mil in pre-tax profit annually for the financial years ending June 30, 2004, onwards following its recent rationalisation exercise with Island & Peninsular Bhd (I&P).
The targeted average pre-tax profit for the next three to four years was based on a conservative crude palm oil (CPO) price of RM1,100 per tonne, said group chief executive Datuk Abd Wahab Maskan.
CPO is currently trading at around RM1,400 per tonne.
“Every RM100 increase in the benchmark price of RM1,100 will boost Golden Hope's projected pre-tax profit by RM30mil to RM40mil,” Wahab said after a presentation on the company's rationalisation and repositioning exercise for fund managers and the media in Kuala Lumpur yesterday.
For the year ended June 30, 2003, Golden Hope posted pre-tax profit of RM360.30mil compared with RM155.48mil the prior year.
Under the rationalisation exercise, Golden Hope will be turned into a pure plantation group after its acquisition of a 99.6% stake in I&P's plantation arm Austral Enterprise Bhd, while I&P will be transformed into a pure property group through its purchase of three property companies from Golden Hope.
“The rationalisation exercise gives Golden Hope the opportunity to boost its earnings over the next few years as we continue pursuing what we know best in the plantation industry,” Wahab said.
He said the rationalisation exercise, slated for completion by April or May next year, would enable Golden Hope to position itself as the second largest plantation company in Malaysia in terms of hectarage after the Federal Land Development Authority (Felda). In terms of market capitalisation, Golden Hope's ranking would rise to 15 from 29 now.
Wahab said Golden Hope would be able to focus on downstream activities such as edible oils and fats and oleochemicals, which had vast potential for growth in the value chain to support the group's overall performance.
“The rationalisation exercise offers Golden Hope better prospects in terms of larger hectarage, better economies of scale, efficiency and cost competitiveness which will make our company more attractive to both local and foreign investors,” he added.
Wahab said with the acquisition of Austral, Golden Hope would be well on its way to achieving its target of having a plantation land-bank of over 200,000ha.
In addition, the group's fresh fruit bunches production would be increased by over 40% in the near future, he added.
“Post-rationalisation, Golden Hope will see higher productivity and output by having 90% of the total planted area with mature oil palm,” he said.
Wahab also expects higher palm oil production growth in view of the young estate profile of Austral. “Some 45,315ha of Austral's land are available for harvesting,” he said.
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