KAJANG: Greenyield Bhd, an agricultural yield enhancement specialist, is expanding into rubber plantation development and management as part of its strategy to diversify the income base amid the current global economic uncertainties.

Previously, Greenyield formed a strategic alliance with multinational companies to develop rubber plantations. Now the ACE Market-listed company is expanding the plantations on its own, said group managing director Don Tham Foo Keong.

However, earnings from rubber plantation would not be realised immediately. “We expect earnings from our rubber plantation business to come in six years’ time,” he told The Edge Financial Daily. “We have more than 3,000 acres (1,200ha) to cultivate rubber now in Kelantan and we have finished planting 1,000 acres. We are going to start planting another 1,000 acres in June.”

Tham said the company is looking to acquire more land for rubber cultivation in the future if the opportunity emerges. Greenyield is relatively cash-rich. As at Oct 31 last year, the company had about RM16.2 million net cash.

Founded in 1937, Greenyield develops, manufactures and markets agricultural systems, products and services based on agro-technology. The company also produces artstone plant pots that are mainly exported to the US, Australia and Europe.

Its agricultural systems, products and services include gaseous stimulation system such as RF5G, liquid stimulation system such as Ethephon Plus, agricultural chemicals such as GreenPlus and rubber tapping utensils.   

For FY11 ended July 31, more than 73% of group revenue (from external customers) was generated from the sale of plantation-related systems, products and services. The balance came from the sale of its non-plantation products such as the artstone plant pots.  

The company derives more than 75% of its group revenue from export markets.

Greenyield had last September entered into a memorandum of understanding with two individuals to acquire Tigantara Plantations Sdn Bhd together with the latter’s right to utilise near 1,000 acres in Kelantan for rubber cultivation for RM2.8 million cash.

Tham said the company intends to use its proven expertise in enhancing the yield of rubber plantation on the land.

The proposed acquisition of Tigantara marked its expansion into the rubber plantations business on its own. Greenyield has been mainly involved in the rubber plantations development and management businesses via its 30%-owned Melati Aman Sdn Bhd all this while.

The company’s net profit for the first quarter ended Oct 31 jumped to RM2.19 million from RM786,000 a year earlier, due mainly to strong demand for plantation-related products and services from overseas market. Its revenue for the quarter rose to RM13.58 million from RM8.02 million a year ago, while earnings per share ballooned to 1.32 sen from 0.48 sen previously.

Greenyield closed at 20.5 sen yesterday, giving it a market capitalisation of some RM66.7 million.

This article appeared in The Edge Financial Daily, January 19, 2012.