Ta Ann looking at PNG expansion

SIBU, Sarawak: TA ANN Holdings Bhd, having planted three quarters of its 45,000ha agricultural landbank in Sarawak, is looking to venture into Papua New Guinea.

Headquartered here, the group ventured into oil palm planting in 2000. Within 11 years, it has planted 75 per cent of its plantable landbank.

"We have planted about 35,000ha. We are thinking of venturing into Papua New Guinea. There is still a good margin potential as the land cost is much cheaper than in Indonesia," said group managing director and chief executive officer Datuk Wong Kuo Hea.

"Although oil palm yields of pioneer investors there are showing 30 tonnes of fresh fruit bunches per hectare in a year, we will still need to do a feasibility study.

"We need to assess the soil fertility, potential crop diseases and rainfall pattern," he told Business Times.

"If we go ahead with this venture, it will be developed phase-by-phase, over a span of 10 to 15 years. The eventual plot size will be around 100,000ha," he added.

Eight months ago, Ta Ann had forecast 380,000 tonnes of fresh fruit bunches at its Sarawak estates for the year. Incidentally, its trees started to fruit exceptionally well and the company is reaping bumper harvest. Now, Wong raises his expectation to 450,000 tonnes, 45 per cent more than 2010's harvest of 310,870 tonnes.

Ta Ann's profits for the third quarter ended September 2011 has jumped 51.7 per cent to RM47.93 million, buoyed by good harvest and high palm oil prices. The group now has RM200 million in cash reserves.

Wong said part of the money would be used to plant another 5,000ha with oil palms and fund its second mill, next year. "Just like the first one, this mill will be able to process 120 tonnes of fresh fruit bunches per hour. The mill should be ready by end 2012."

On Ta Ann's traditional business, Wong said the company would continue to invest substantially in forest plantations. "As our business expands, we need more plywood that are produced in a sustainable manner. We have invested in forest plantations to reduce the need to source from natural forests," Wong said.

It has been more than nine months since the earthquake and tsunami in Japan. While the plywood price has increased by 12 per cent to an average of US$650 (RM2,045) per cubic metre since the earthquake, Wong sees demand coming from the reconstruction next year. "Japan had a big stockpile of cheaper imports from China. So, we will only see demand from the reconstruction coming in next year," he said.

Eight months ago, Ta Ann announced a one-for-five bonus issue of up to 51.5 million shares of RM1 each. Asked if shareholders could look forward to another round of bonus issue in the coming months, Wong replied: "Well, bonus issue is one way to reward shareholders while improving share liquidity."

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