Leweko keen to buy downstream timber firms

  • Business
  • Wednesday, 19 Jan 2005

BY Hanim Adnan

Leweko Resources Bhd hopes to acquire timber companies specialising in downstream products like window frames and furniture components as well as land for oil palm cultivation this year. 

Executive director (corporate affairs) Ian Chung said this was part of the group's efforts to have a more balanced portfolio comprising the timber and oil palm businesses, whose contributions it planned to increase. 

Although no discussions were held on potential acquisitions, the company would continue to be on the lookout for opportunities, he told a press conference after Leweko's transfer to Bursa Malaysia's main board in Kuala Lumpur yesterday. 

In 2003, the bulk of the group's net profit came from the timber division while the remaining 25% was from oil palm. 

The integrated timber based group is a concession holder with the right to extract logs from its forest concessions in north Perak and has contractual agreements to purchase logs from other concessionaires, thus ensuring supply for the next eight to 10 years. 

(From left): Leweko executive director Abdul Aziz Jantan, Ian Chung, managing director Datuk Leong Wei Kong, chairman Datuk Seri Mohd Nazri Abdul Rahim, Tan Cheong Yeow and director Othman Sulaiman.

The group is principally involved in timber harvesting and logging infrastructure contracting, processing and the manufacture of sawn timber, moulded timber and other timber-related products, logs trading and transportation. 

Currently, it carries out downstream timber activities at an 8.69ha timber complex in Gerik, Perak.  

The group's oil palm division has about 998ha in Perak planted with oil palm ranging from 8 to 12 years in age and produce an average 2,800 tonnes of fresh fruit bunches per month. 

Chung also said the group would apply for new concessions. It has set up a task force to study the viability of venturing into forest plantations. 

For the nine months to Sept 30, 2004, the Leweko group posted a profit after tax of RM15.49mil. This was slightly more than the full-year proforma group profit after tax of RM15.34mil for the year ended Dec 31, 2003. 

Going forward, Leweko group will emphasise on producing higher value-added downstream timber products by expanding its range of products, which will add value to its wood resources. 

The group, together with three other timber companies from Peninsular Malaysia, are participating in the ongoing Malaysian Wood Industry Association (MWIA) project to produce high-grade laminated scantlings (Lamscants) using lesser commercial Malaysian wood species for windows to the European market. This is done in collaboration with the Forest Research Institute of Malaysia (FRIM), Malaysian Timber Industry Board and Malaysian Timber Council. 

Executive director (finance) Tan Cheong Yeow said samples of the lamscants had been tested by FRIM to comply with certain European standards and had been sent to Germany for further product testing by window manufacturers there. 

“Once approved, the lamscants production will kick off some time in the third quarter this year,” he said. 

In Germany alone, 80% of the wooden windows (or 13.3 million running meters worth RM293mil) are made of lamscants. 

Tan said market acceptance in Germany would pave the way for Malaysian lamscants makers to enter Britain, Spain, Turkey, France, Italy and Poland. 

 LEWEKO :  [Stock Watch]  [News]

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