This article has been updated for accuracy.

KUALA LUMPUR (Feb 19): Plantation firm Kim Loong Resources Bhd is buying four plots of oil palm plantation land in Sabah for RM92.53 million to increase its land bank and long-term profitability growth.

The parcels, with a combined size of 1,158ha, are located near its estates in Sandakan, so the acquisitions are expected to bring about synergistic effects and benefits in terms of cost efficiency of managing the plots, Kim Loong said in a stock exchange filing today.

The plots are now separately owned by four private companies, namely Greenfingers Sdn Bhd, R&H Sdn Bhd, Bakti Perusahaan Sdn Bhd and Sri Handal Sdn Bhd. Kim Loong is planning to fund the acquisitions using internal funds.

Kim Loong has not commissioned any independent valuation of the parcels but thinks the price tag is "fair and reasonable", given the age profile of the oil palm trees on the plantations and how well maintained they are.

The purchase should increase Kim Loong's fresh fruit bunch (FFB) supply and contribute towards optimising the utilisation of its mill processing capacity, the filing read.

In 2019, the four parcels of land produced some 29,680 metric tonne (MT) of FFB, close to 10% of Kim Loong's total FFB production of 310,082 MT in 2019.

Kim Loong expects to complete the proposed acquisition, which is subject to approval from Sabah's Ministry of Agriculture and Fisheries, in the third quarter of this year.

Kim Loong's shares closed unchanged at RM1.25 today, giving it a market capitalisation of RM1.17 billion. The counter saw some 89,500 shares done.