Nod for Asia Media oil palm venture

KUALA LUMPUR: Transit-TV network operator Asia Media Group Bhd yesterday received shareholders’ approval for its proposed diversification into the oil palm plantation sector and it expects the new venture’s contribution to exceed that of its multimedia advertising business in five years.
Group CEO Datuk Ricky Wong Shee Kai told reporters this after Asia Media’s EGM yesterday.
Shareholders also approved a renounceable rights issue with warrants to raise up to RM71 million for the new business.
Wong said the proceeds will go to the cultivation of oil palm on its 10,000-acre land in Sibu, Sarawak. The cultivation process will begin in the fourth quarter of this year.
“We plan to fully develop (the 10,000 acres) within two to three years. We will start the first phase by year-end, with about 5,000 acres, and the second phase will be on the next two or three years, with another 5,000 acres,” he added.
Wong said the group is currently in talks with Sarawak’s Ministry of Land Development and Ministry of Planning and Resource Management to acquire 20,000 acres more in the same area in Sibu.
“We are still at discussion stage. Once that materialises, we will make the announcement,” he said, adding that the group is targeting to fully plant the 30,000 acres within five years.
The group’s subsidiary, DPO Plantations Sdn Bhd, has formed a joint-venture company with Batu Emas Resources Sdn Bhd and Sarawak’s Land Custody and Development Authority (LCDA) to cultivate oil palm.
DPO Plantations holds a 60% stake in the JV company, while Batu Emas and Sarawak LCDA hold 30% and 10%, respectively.
Commenting on its outlook for the palm oil industry, Wong said while low crude palm oil prices remain a major challenge for the industry, he believes the lagging price of the commodity is good for the group’s venture into the palm oil industry.
“In the first few years, the (oil palm business ) income will be low, because we have to wait for the trees and the fruits to grow. So, normally, by industry standards, from the fourth year onwards, we will start seeing its contribution,” he said.
For first quarter ended March 31, 2015, Asia Media recorded a net loss of RM5.58 million, against a net profit of RM327,000 in the previous corresponding quarter, due to higher depreciation costs charged during the quarter.
Revenue for the quarter declined to RM3.56 million from RM6.87 million previously, attributable mainly to a drop in demand from customers.
“In the next quarter’s results, we will try our best to push up our profit margins to offset the difference between the depreciation, and thus creating income,” Wong said.
Asia Media offers infotainment and targeted advertising, through digital electronic displays installed in various outdoor premises.
Currently, it has about 3,993 liquid crystal display screens installed in 1,800 buses plying the market centric hubs of the Klang Valley and Johor Baru.