Tuesday, Jul 04, 2006
MARC has affirmed YPJ Oil Palm Estate Sdn Bhd’s (YPJOPE) RM180 million Guaranteed Commercial Papers rating at MARC-1 (bg). The affirmation reflects the unconditional and irrevocable guarantee provided by a consortium of financial institutions comprising Affin Merchant Bank Berhad, Affin Bank Berhad and Bumiputra-Commerce Bank Berhad.
YPJOPE is principally involved in the cultivation and management of palm oil estates. Currently, YPJOPE manages its own 10,686 hectares of palm oil estates known as Ladang YPJ, Ladang Yayasan, Ladang Alaf (which are located in Kulai) and Ladang Payamunis located in Mersing. As at January 2006, matured palm oil occupied 84% of total planted area or 8,699 hectares, of which over 62% are matured trees between the age of 15 to 20 years. The balance comprises immature field which is less than four years old and there are no over-aged palms. YPJOPE’s sole mill in Kulai has an installed processing capacity of 30MT/h and is currently operating at efficiency level of over 90%.
In FY2005, YPJOPE’s revenue declined to RM67.7 million from RM88.5 million previously, attributable to lower FFB production, hence lower CPO produced for the year at 32,734 tonnes, compared to 34,527 tonnes delivered in FY2004. The situation was further aggravated by lower overall selling prices of CPO and FFB during the year, averaging at RM1,413 and RM273 per tonne respectively (2004: RM1,645 and RM331 per tonne). Operating profit margin, nonetheless, chalked up a better performance at more than 50%, aided by the RM13.4 million gain on disposal of land measuring approximately 735 acres in 2005 to Tanjung Bintang Sdn Bhd; in relation to the proposed development of Bandar Akademi YPJ.
Going forward, sales of FFB and CPO, will continue to be the two main drivers of the YPJOPE’s total revenue. Assuming an average CPO price of RM1,400 over the tenure of the CP facility, YPJOPE’s annual gross profit margins are projected to remain comfortable at above 30% during the CP’s tenure on the back of steady growth in production yield.
YPJOPE’s financial flexibility is mainly drawn from YPJ Corporation Sdn Bhd, its parent/holding company which in the past had made advances to YPJOPE in excess of RM100 million. Its debt leverage has decreased substantially to 0.58x as at the end of 2005 owing to a massive asset revaluation reserve amounted to RM246 million in respect of its long leasehold land and plantation development land. Moving forward, YPJOPE’s liquidity is expected to be enhanced through its impending IPO exercise.