DSR hopes for fruitful year

IT’S the durian season and durian plantation company DSR Taiko Bhd is in the thick of things.

The Pahang-based company is also in the midst of getting its listing status transferred from Bursa Malaysia’s LEAP market to the ACE market.

Chief executive officer Datuk Ng Lian Poh says the listing transfer is a lengthy process but it is in progress, subject to approvals from the relevant parties and authorities.

Meanwhile, Ng says DSR plans to acquire more matured orchards this year as part of its overall growth strategy.

“With demand for our fruits and downstream products growing, plans for expansion are on the table,” he tells StarBiz 7 in an interview.

Ng says there is “good demand volume” coming from China.

“Demand is always higher than supply, “ he adds, without revealing how much of its sales currently come from China, its biggest market. “We are selling to the world’s factory China instead of buying from them.”

DSR made a net profit of RM1.29mil on revenue of RM7.9mil for the six months ended Dec 31, 2024, compared to a net profit of RM1.25mil on sales of RM6.5mil for the same period, a year earlier.

The higher revenue was due to higher average selling prices of its harvests, the company says, adding that this was achieved despite higher exhibition expenses and depreciation of property, plant and equipment.

DSR’s stock last traded at RM1.18, valuing the whole group at RM385mil. However, the stock is trading at a massive 107 times trailing 12 months price-to-earnings ratio.

The company has durian plantations which encompass over 5,600 durian trees, all grown at its Raub and Bentong orchards.

More than 80% of these comprise matured trees, Ng says.

He says DSR targets to improve margins, especially from its downstream specialty products, such as durian pizza, buns, truffle popcorn, Musang King gelato and coffee. “With our growth plans will come better margins due to economies of scale and increased efficiency.”

According to him, one of the company’s strengths is it being the only integrated company with a quality assurance MS certification, which refers to the Malaysia Standard certification for durian, specifically for the Musang King variant durian and its related products.

“With this, we are the only one which can prove and verify that our downstream products like gelato and coffee utilise genuine Musang King durian,” Ng adds.

Increasing competition

Nevertheless, the company admits that competition is increasing.

“We foresee more Musang King durian downstream products coming into the food and beverage industry, for one.”

Ng says as DSR remains the only integrated company with MS certification for now, it considers only commodity players which do not sell “branded products” as its closest competitors.

Moving forward, he reckons the durian industry in Malaysia will place more emphasis on quality assurance.

“There will be more focus on safety, originality and quality – we call this the SOQ,” Ng says.

Another key challenge for the company, he says, is the lack of concerted effort on the part of stakeholders to promote and market durians and its related products as premium products.

“The challenge is also how to properly execute the strategy of ‘local to global, trading to branding, commodities to value-added products’, which is time- and capital-consuming.”

In its latest consolidated financial report, DSR says there are typically two durian seasons in a year, the primary season usually begins in the middle of the year and runs for about three months.

The secondary season usually begins at the end of the year. However, its downstream durian-based products such as frozen durians allow for durians to be available throughout the year.

DSR was listed back in July 2022, gaining a premium of more than 200% over its reference price of 30 sen then, and making headlines with that strong debut on the LEAP Market.

The company has not declared any dividends since it got listed.

“Dividends for shareholders will come with results,” Ng says.

On Nov 12, 2024, the company said it had received a proposal letter requesting the board to consider undertaking a proposed transfer from the LEAP Market to the ACE Market.

As a result, in February this year, the company had proposed to undertake a bonus issue on the basis of five bonus shares for each existing DSR Taiko share held on the entitlement date.

The proposed bonus issue will be implemented before the proposed transfer but after the receipt of approvals required for the proposed corporate exercises.

In its latest financial report on Bursa Malaysia’s website, DSR says the company’s prospects remain “positive and well-positioned” to capitalise on growth opportunities through a series of strategic initiatives.

“We are expanding our durian plantations in Bentong and Raub to increase harvest yield capacity to secure a steady supply for the downstream production demand, while also investing in research and development to commercialise innovative durian-based products,” DSR says.