“But it all depends on the availability of land and the price of the land. We want to go in at the lower cycle where there is a longer period of low CPO (crude palm oil) price, when there would be more willing sellers. The last downcycle was short-lived,” HSP managing director Datuk Edward Lee Ming Foo said after its AGM yesterday.
Lee said it could further explore acquiring land in Kota Marudu, northern Sabah, in which it acquired some 727ha last year. He ruled out Indonesia as its current planned expansion was still possible in Sabah.
Group finance director Soon Seong Keat said HSP had a strong balance sheet to support its acquisition.
“We can take that sort of liability. The balance sheet is currently very clean and you can hardly find any leverage on our balance sheet,” he said.
HSP’s cash and cash equivalents stood at RM50.45 million as at March 31, 2009 (1QFY09), a 35% increase from RM37.34 million a year earlier.
HSP announced yesterday that its net profit rose 5.6% to RM13.9 million in 1Q09 from RM13.17 million a year earlier on the back of a 60% jump in revenue to RM73.25 million from RM45.79 million.
The firm posted a higher revenue as CPO and palm kernel sales volume was higher at 30,145 tonnes and 6,442 tonnes, versus 13,252 tonnes and 4,906 tonnes a year earlier, respectively. Earnings per share was 1.74 sen versus 1.65 sen.
HSP said the group’s performance was affected by the seasonal yield pattern of the crops, lower commodity prices and higher cost of production as a result of higher fertiliser costs and adverse weather conditions also affected deliveries.
It achieved an average CPO and palm kernel selling prices of RM2,143 and RM812 a tonne respectively, compared with last year’s of RM2,431 and RM1,995 a tonne.
CPO for August delivery closed RM15 lower at RM2,430 per tonne.
“The CPO price is beyond our control but we hope the recent recovery is sustainable till the end of the year.
“The fundamentals for CPO are strong but anything can happen in the short term. But for the medium-long term, fundamentals for food production worldwide are strong. Although there is dry weather affecting certain parts of the world, Malaysia is relatively free from natural disasters. I think plantations will continue to have a good future,” he said.
HSP fell two sen to RM2.30 yesterday, with nearly 1.2 million shares traded.
This article appeared in The Edge Financial Daily, May 27, 2009.