This article first appeared in The Edge Financial Daily on May 24, 2017

KUALA LUMPUR: KUB Malaysia Bhd is targeting a double-digit growth in earnings this year as it implements expansion plans to improve the prospects of its liquefied petroleum gas (LPG) and agriculture (agro) businesses.

“We will be able to sustain the growth momentum that we have seen over the last few quarters for these two (power and agro) sectors,” said KUB president and managing director Datuk Abdul Rahim Mohd Zin.

The group is looking to hold a major stake in its proposed joint venture with German-linked Mabanaft Pte Ltd to build and run a US$80 million (RM343.64 million) refrigerated LPG terminal at Westport in Port Klang.

“Our expectation is, we will be the majority, [with] at least [a] 51% ownership by KUB [in the joint venture],” Abdul Rahim told the media after KUB’s annual general meeting yesterday.

KUB is also developing a RM2.5 million pipeline for its existing terminal there to improve supply and increase capacity. It will also allocate another RM8 million to increase its LPG distribution network, for which it is currently identifying new partners and distributors.

On the agro segment, Abdul Rahim said the 1,500ha brownfield oil palm land in Kinabatangan, Sabah, which it proposed to acquire from Kwantas Plantation Bhd for RM100.45 million last month, will immediately contribute to its books once the deal is finalised at year end.

“[The land] recorded [a yield of] 24 tonnes per hectare, much better than the average of 17 tonnes for our own 7,300ha of existing plantations,” he said, adding that based on the pricing and valuation, it will contribute positively “even with the funding cost”.

Meanwhile, KUB is not discounting the possibility of exiting from its A&W fast-food business. “We have received several proposals [to buy A&W], none of which are anywhere close to the price we think we want to sell it for.”

However, Abdul Rahim said KUB will proceed to spend another RM25 million to raise the number of A&W outlets to 52 by June 2019, in compliance with the three-year development agreement with its franchiser.

KUB will also continue to dispose of its non-core assets — mostly relating to investment properties — to support expansion plans in the LPG and agro sectors.

“We hope to secure at least another RM25 million in cash proceeds from the sale of these properties,” said Abdul Rahim. The group sold RM5 million worth of non-core assets last year.

However, its Petaling Jaya land will still be developed. Abdul Rahim said KUB is close to receiving the development order (DO) but it will not include residential property as initially planned, as dictated by the location’s zoning laws.

“The gross development value that we are targeting is around RM245 million. However, this [development] will only be for commercial development. We’ve had various stages of applications with the local council, for which we hope we can receive the approval by July. We are targeting to at least get the DO out, and then open up selective bidding to the many developers that have indicated their interest.”