Al-Hadharah REIT keen to top up assets

KUALA LUMPUR: AL-HADHARAH Boustead REIT is keen to buy income-generating plantation estates to top up its asset base, chairman Tan Sri Lodin Wok Kamaruddin said.

Currently, Al-Hadharah REIT has 12 oil palm plantations and three palm oil mills with a combined area of around 20,000ha.

Boustead Holdings, the parent of Al-Hadharah Boustead REIT, has an agriculture landbank of 81,333ha. To-date, more than 80 per cent of the landbank has been planted with oil palms.

Lodin, who is also Boustead deputy chairman and group managing director, expects crude palm oil (CPO) prices to rise to RM2,600 per tonne.

For the past seven months, CPO prices on the Bursa Malaysia Derivatives Exchange had been fluctuating between RM2,200 and RM2,500 a tonne.

"Since the start of the year, the CPO inventory level has started to come down from a record of 2.6 million tonnes to 2.14 million tonnes at end-March. If this trend continues, we can expect to see it coming down further to about 1.8 million.

"This, coupled with strong demand ahead of Ramadan month from Islamic nations and south Asian countries like India, Pakistan and Bangladesh, will be a boost to palm oil prices. As global demand starts to pick up and production comes down a little, we can expect palm oil prices to rise to about RM2,600 per tonne," Lodin said.

While 19,945ha of Boustead's 68,375ha planted area is injected into the Al-Hadharah REIT, he said, it is open to asset inclusion from other estate owners.

"We are open to acquire new assets to top up the REIT. It does not always have to be injected from Boustead. If there are any other estates that are profitable and interested to be part of the REIT, we are open to discussions. We prefer them to be in the right location and, of course, at the right price," Lodin said after Al-Hadharah REIT's inaugural annual general meeting here yesterday.

Also present were Al-Hadharah REIT chief executive officer Fahmy Ismail and executive director Daniel Ebinesan.

In raising yield at the Al-Hadharah REIT estates, Lodin said Boustead's plantation team will continue its replanting programme to replace ageing trees with high-yielding hybrids and clones supplied by its associate, Applied Agricultural Resources Sdn Bhd (AAR).

AAR, an equal joint venture between Boustead Plantations Bhd and Kuala Lumpur Kepong Bhd (KLK), had been breeding hybrids for the past 25 years.

"Our high-yielding hybrid seeds are meticulously bred and cloned by AAR scientists," Lodin said, adding the hybrids have proven track records of producing more than 35 tonnes of fresh fruit bunches with 23 per cent oil extraction rate.

That works out to be about nine tonnes of oil a hectare in a year or more than two times higher than the country's average yield.

"AAR's role has helped sow the seeds for good and stable dividends for the REIT unitholders every year since 2008," he added.

In the long run, Lodin noted AAR's palm breeding plan is to produce elite planting materials using marker assisted genome-wide selected palms. This, he said, will lead to a speedier and more precise prediction of superior parents for seed production.