This article first appeared in The Edge Financial Daily, on May 25, 2016.

KUALA LUMPUR: Plantation group Astral Asia Bhd is confident of returning to profit in the financial year ending Dec 31, 2016 (FY16), after two years of losses, supported by higher crude palm oil (CPO) prices and better fresh fruit bunch (FFB) production.

“We expect to be in [the] black this year, supported by an increase in production and better CPO prices, which are trading at about RM2,500 [per tonne],” Astral Asia executive director Lim Guan Shiun told reporters after its annual general meeting yesterday.

Astral Asia has been in the red since FY14. In FY15, its net loss widened to RM5.45 million from RM717,000 in FY14.

“We will have minimal replanting cost this year, too, as we have fully replanted all the old trees. There is no more [a] replanting plan for this year,” he said, adding that the replanting started in 2013 and was completed by end-2015.

Lim expects FFB production, which has been trending down since 2012 due to replanting, to improve this year.

As for its proposed acquisition of 35,000 acres (14,164ha) of oil palm estate in Kapit, Sarawak, Lim said the company had until mid-June to make a decision, 45 days from the signing date of a memorandum of agreement (MoA).

He said the Pan Borneo Highway, set to be completed in 2018, will connect Sibu and Kapit.

Astral Asia’s subsidiary Astral Plantation Sdn Bhd entered into the MoA on May 10, with Sima Properties Holdings Sdn Bhd, to acquire Paramount Estate Sdn Bhd, which owns 80% of Paramount Pelita Kapit Sdn Bhd (PPKSB). PPKSB holds provisional leases of 13 pieces of land, which are all located in Sungai Gaat, Balleh, Kapit in Sarawak, measuring about 35,000 acres.

Currently, some 1,500 acres of the lands have been planted with oil palms.

“We can’t disclose the price tag as we have yet to formally discuss it with the vendor,” Lim said, adding that Astral Asia had yet to decide on the funding mix for the buy, which will see its plantation land bank rise by 357% from 9,800 acres to 44,800 acres.