Harvesting value

HAVING exited its loss-making timber operations, WTK Holdings Bhd is entering an “optimisation phase” as it reshapes its plantation portfolio to build a leaner, more efficient business.

Rather than simply expanding its plantation portfolio, the Sarawak-based group is selectively acquiring higher-quality assets, while divesting estates that are less integrated with its operations.

In April this year, it completed its RM555mil acquisition of two oil palm estates and a palm oil mill. The following month, WTK announced the proposed disposal of a plantation subsidiary in Limbang for RM90mil and about two weeks ago, it also announced plans to dispose of three more estates in Miri for RM221.5mil.

Executive director Francis Lai says the group will continue refining its plantation portfolio, reviewing existing assets while remaining open to commercially sensible and value-accretive acquisitions.

“We are now in an optimisation phase where each asset is assessed based on operating performance, capital needs, location and contribution to long-term earnings,” Lai tells StarBiz 7.

According to him, the Miri and Limbang estates were selected for disposal because they are located far from the group’s milling operations, resulting in higher transportation costs and longer transit times that affect crop quality.

In addition, the oil palms in the Miri estates have reached an average age of about 14 years, meaning substantial replanting investment would be required in the coming years.

“Given their location, we believe those investments are better directed towards higher performing estates within our core operating regions,” he adds.

The proposed disposals are expected to generate total cash proceeds of RM311.5mil and an estimated combined net gain of RM157.2mil.

Lai says the proceeds will provide WTK with greater financial flexibility to support plantation development, replanting programmes and estate maintenance across its remaining estates, while also reducing borrowings.

In contrast, the RM555mil acquisition of Desacorp Sdn Bhd, Imbok Enterprise Sdn Bhd and WTK Oil Mill Sdn Bhd has significantly strengthened WTK’s plantation platform.

The acquired estates have stronger yield profiles than the group’s legacy plantations, he says.

“For the financial year 2025 (FY25), Desacorp recorded a fresh fruit bunch (FFB) yield of 20.7 metric tonnes per hectare (MT/ha), while Imbok achieved 17.3 MT/ha, compared with 15.3 MT/ha for WTK’s existing estates.

“The age profile is also favourable. While Desacorp’s plantations are largely in their prime mature and mature stages, providing steady near-term production, more than 90% of Imbok’s planted area comprises immature and young mature palms, offering future production upside as the trees enter their peak years.”

Following the completion of the acquisitions in April, Lai says WTK’s total planted area expanded by 84.3% to 32,166ha, giving the group a broader production base with both immediate earnings contribution and longer-term growth potential.

Beyond plantations

Besides its plantation business, WTK has two other operating divisions. Its food division imports and distributes frozen food products, including meat, seafood, poultry and processed foods, and is emerging as the group’s second growth engine.

Meanwhile, the tapes division, which operates through its Penang-based processing facility, is a leading converter and distributor of adhesive tapes and packing materials in Malaysia.

With all three divisions now profitable, Lai says earnings momentum is expected to strengthen from the second quarter (2Q) of FY26 onwards, when WTK begins consolidating earnings from the recently acquired plantation assets.

“Operationally, WTK is already profitable, as demonstrated in our 1Q results which showed profits across all our key divisions of plantation, food and tapes.

“Any future acquisition must strengthen the portfolio and contribute positively to long-term earnings,” he says.

Following its exit from the timber business, WTK returned to profitability in FY25, posting a net profit of RM38.6mil after six consecutive years of losses.

For the 1Q ended March 31, 2026, the group posted a RM7.27mil net profit on revenue of RM131.25mil.

Lai says the food business is strategically important as it provides WTK with a more diversified earnings base, reducing its reliance on the more cyclical plantation segment. The food business contributed RM38.6mil, or 29.4% of group revenue in the 1Q, making it WTK’s second-

largest revenue contributor after the plantation division.

As for the tapes division, Lai says WTK is repositioning the business under a leaner, asset-light model by moving away from manufacturing to focus on converting and distribution, thereby reducing capital expenditure while preserving its customer base and market presence.

“Our group’s portfolio is now centred on plantations as the core earnings driver, with food emerging as the second growth engine and the tapes division serving as a profitable complementary business,” he says.

Strategy remains on track

WTK has also been in the spotlight amid a long-running dispute involving members of the Wong family following the passing of former executive director-cum-chief executive officer Datuk Wong Kie Nai in 2013.

Lai says the matter relates to the Wong family’s private investment vehicles that hold shares in WTK and has no bearing on the group’s operations, governance or long-term strategy.

“Under the leadership of our current group managing director and chief executive officer Datuk Seri Patrick Wong Haw Yeong, we have worked together to restructure the group by exiting lossmaking operations, expanding our plantation platform and growing our food business.

“That strategic direction remains firmly in place, and our priority is to continue improving operating performance and sustaining the positive growth momentum we have built,” he adds.

In Lai’s view, the group’s progress has yet to be fully reflected in its valuation, noting that its current share price of 82 sen trades well below WTK’s net assets of RM1.56 per share.

“This is a gap that we believe will narrow as our growth strategy delivers,” he says.

WTK’s share price has risen 16% year-to-date and doubled over the past one year, suggesting that investors are beginning to price in the group’s transformation potential. Whether that valuation gap narrows further will ultimately depend on WTK’s ability to translate its strategic transformation into sustained earnings growth.

The Wong family, alongside related entities, holds an aggregate 42.03% direct and indirect stake in the stock.