Friday, May 20, 2011

TSH Resources plans RM100m capex for new planting

KUALA LUMPUR: TSH RESOURCES BHD [] has allocated RM100 million or more per year as PLANTATION [] development capital expenditure (capex) for new planting of oil palm trees, the bulk of which will in Kalimantan, Indonesia.

Its chairman Datuk Kelvin Tan Aik Pen said on Friday, May20 the RM100 million would be internally generated.

'Bulk of the RM100 million capex would be for new planting in Kalimantan where we have about 58,000 ha of land which is still unplanted,' he said after the AGM, adding that its Indonesian operations would be the main growth driver for the group.

As at Dec 31, 2010, TSH had 23,507 ha which have been planted in Indonesia and 57,782 ha yet to be planted.

Tan said capex was not an issue for TSH due to its strong cashflow from its operations which would increase over the next few years when more of the oil palm trees mature.

He added TSH's gearing was only 0.7 times and there was no need to increase it. He expected the gearing to decline as its cashflow increases over the next few years.

He said the four factors which would underpin TSH's growth would be the substantial planted acreage which would come into maturity which would see an impressive fresh fruit bunches (FFB) growth for the next few years.

'We also have sizeable land bank for further expansion while its high yielding tissue culture would boost productivity,' he said.

Another factor which would drive TSH would'' be its emphasis on people development to create a talent pool and sustain its business in the long term, he said.

TSH group's oil palm tree age profile as at Dec 31, 2010 was that 54% of them was immature trees less than four years old, while 19% was between four and six years (mature), 14% between seven and 15 years while the remaining 13% were between 16 and 20 years.

Tan also said TSH's FFB production growth would be an average 43% over the next four years from 2011 to 2014, underpinned by its contribution from Indonesia.

It projects total production ' including Indonesia and Sabah -- to grow by 34% to 349,000 tonnes in 2011, surge by 81% to 518,149 tonnes in 2012,'' increase by 30% to 636,753 tonnes in 2013 and climb by 25% to 763,818 tonnes in 2014.

On its dividend policy, Tan said TSH would continue its policy of paying out between 20% and 30% of its net profit as dividends.

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