Thursday, Oct 28, 2004
MARC has upgraded Boustead Plantation Berhad’s (Boustead Plantation) (formerly known as Kuala Sidim Berhad) long-term rating under Tranche 1 from A(BG) to A+(BG) and reaffirmed the rating of Tranche 2 at A-. Meanwhile the short term ratings of Tranche 1 and 2 are reaffirmed at MARC-1 and MARC-2 respectively. The RM50 million Tranche 1 upgrade reflects the unconditional and irrevocable guarantee by Southern Bank Berhad (SBB). The rating affirmation of RM50 million Tranche 2 is underpinned by the Group’s sizeable land bank; favourable plantations maturity profile; strong profitability indicators and manageable debt leverage. The rating, however, is moderated by lower key performance indicator when compared to other major plantation players; significant receivables due from holding company and vulnerability to cyclical developments in the palm oil industry.
Boustead Plantation is principally involved in the cultivation and processing of palm oil, natural rubber, bulking of edible oil and agriculture research and advisory services. Palm oil plantings remain the Group’s primary crop, accounting for 99% of its total planted area while the remainder consists of forestry, rubber and coconut plantings.
In 2003, albeit deterioration in average yield per mature hectare to 15.5Mt/ha (2002: 16.6 MT/ha) and average OER to 19.8% (2002: 20.3%), the Group’s revenue nonetheless steadily rose by 24% to RM363 million. The strong earnings were mainly attributed to favourable CPO prices which averaged RM1,504/MT during the year. The decline in both yield and oil extraction rate were due to the high percentage (54%) of plantings comprising relatively immature palms aged 6 years and below. Nevertheless, the gradual shift of the palms profile into prime age category somewhat ensures that the Group would reap steady if not rising yields going forward.
As at end 2003, Boustead Plantation’s eight palm oil mills with a combined processing capacity of 310 MT/hr have been operating at full capacity. In anticipation of higher FFB production over the next few years, the Group plans to build another two new mills. The construction of the Logan Bunut mill, with a capacity to produce 30-45 MT/hr of CPO was recently completed. It is expected to be fully operational by third quarter of 2004.
In fiscal 2003, Boustead Plantation’s debt leverage level improved to 0.44 times (2002: 0.53 times) aided by retained earnings coupled with substantial repayment of bank borrowings. Boustead Plantation’s receivables from holding company, however, remained high at RM317 million (2002: 392 million). Debt servicing ability strengthened to 2.96 times (2002: 1.42times) in line with higher operating cash flow from operations.
Boustead Plantation is principally involved in the cultivation and processing of palm oil, natural rubber, bulking of edible oil and agriculture research and advisory services. Palm oil plantings remain the Group’s primary crop, accounting for 99% of its total planted area while the remainder consists of forestry, rubber and coconut plantings.
In 2003, albeit deterioration in average yield per mature hectare to 15.5Mt/ha (2002: 16.6 MT/ha) and average OER to 19.8% (2002: 20.3%), the Group’s revenue nonetheless steadily rose by 24% to RM363 million. The strong earnings were mainly attributed to favourable CPO prices which averaged RM1,504/MT during the year. The decline in both yield and oil extraction rate were due to the high percentage (54%) of plantings comprising relatively immature palms aged 6 years and below. Nevertheless, the gradual shift of the palms profile into prime age category somewhat ensures that the Group would reap steady if not rising yields going forward.
As at end 2003, Boustead Plantation’s eight palm oil mills with a combined processing capacity of 310 MT/hr have been operating at full capacity. In anticipation of higher FFB production over the next few years, the Group plans to build another two new mills. The construction of the Logan Bunut mill, with a capacity to produce 30-45 MT/hr of CPO was recently completed. It is expected to be fully operational by third quarter of 2004.
In fiscal 2003, Boustead Plantation’s debt leverage level improved to 0.44 times (2002: 0.53 times) aided by retained earnings coupled with substantial repayment of bank borrowings. Boustead Plantation’s receivables from holding company, however, remained high at RM317 million (2002: 392 million). Debt servicing ability strengthened to 2.96 times (2002: 1.42times) in line with higher operating cash flow from operations.