SD Guthrie Bhd
., the world’s biggest oil palm planter by acreage, is positioning itself to tap into the data-center boom as it looks to develop a green-energy powered industrial park in Malaysia’s southern state of Johor.
The plantation giant, which owns 340,000 hectares across Malaysia, is expanding into industrial parks and renewable energy to reduce its reliance on palm oil. Its landbank in Johor will enable the group to become a key asset owner and green power supplier in Southeast Asia’s fastest-growing data center hub.
Discussions are ongoing with other parties for the project in Kulai and an announcement is expected to be made "in the next four to six months,” Group Managing Director Datuk Mohamad Helmy Othman Basha said in an interview Tuesday. He did not provide further details.
"Data centers require land and it has to be strategic, and this is where we can play a role because now we are in the business of providing the land for industrial parks,” he said.
The company had signed a memorandum of understanding with AME Elite Consortium Bhd. in November to jointly develop a green industrial park within the Johor-Singapore Special Economic Zone. It said at the time that the park will be built on 641 acres of land belonging to SD Guthrie.
The company will allocate about 10,000 hectares over the next decade to develop industrial parks that will be fueled by electricity from solar farms built on its remote lands, Helmy said. The new businesses are expected to make up about 30% of SD Guthrie’s bottom line by 2030.
SD Guthrie last week announced a tie-up with infrastructure firm Gamuda Bhd. to develop, own and operate solar power assets with an accumulated target capacity of 1.2 gigawatts. Its first solar plant in Kedah is targeted to begin operations in the fourth quarter.
An industrial park in Johor will have plenty of potential due to demand for industrial land that outstrips supply, said Ivy Ng, head of Malaysia research and agribusiness at CIMB Securities. The move could help increase the value of SD Guthrie’s land and reduce earnings volatility which are heavily dependent on crude palm oil prices, she said.
Johor, the Malaysian state that borders Singapore, has attracted over 164 billion ringgit ($39 billion) in data center investments - including from hyperscalers to meet artificial intelligence demand - in a short span of four years. This include funds from Microsoft Corp, Nvidia Corp, and DayOne Data Centers Singapore Pte.
Still, potential competition looms with the rapid development of data centers in neighboring countries, including Thailand, and as more industrial parks come on line. SD Guthrie’s shares fell as much as 0.8% on Wednesday.
The stock has outperformed the benchmark stock index this year, gaining 1% against a 3.7% decline in the index. SD Guthrie has a market capitalization of 34 billion ringgit.
"If they can get this industrial land development revenue stream to become more recurrent, it can boost their earnings space over time,” Ng said. The plantation firm has also signed pacts to co-develop industrial parks in Perak and Negeri Sembilan. - Bloomberg
