Puncak Niaga ventures into oil palm plantation business

PETALING JAYA: Puncak Niaga Holdings Bhd is expanding into the oil palm plantation business through the acquisition of all of Danum Sinar Sdn Bhd for RM446.51 million in cash.

In a filing with the stock exchange, Puncak Niaga said Danau Semesta Sdn Bhd, a 60%-owned company of Murni Estate Sdn Bhd, which in turn is a wholly owned subsidiary of Puncak Niaga, has entered into a sale and purchase agreement with Shin Yang Holding Sdn Bhd for the acquisition.

Danum Sinar is the registered proprietor and has legitimate expectation from the Sarawak state government for the issuance of the provisional lease of certain parcels of land in an approximate total area of 46,674 hectares in Sarawak.

The majority of the land held by Danum Sinar is vacant plantable areas, and, of the total planted portion, the majority of the area is filled with young palms with a longer harvesting period.

Based on the latest audited financial statement for the financial year ended June 30, 2015, Danum Sinar recorded a net loss of RM3.7 million on the back of RM15.1 million in net assets.

The proposed acquisition is in line with Puncak Niaga’s overall vision in maximising returns to the Puncak Niaga group with direct involvement in the plantation sector that has proven to be a sustainable business, following the disposal of its water treatment and distribution business to the Selangor state government in October 2015.

Puncak Niaga said the acquisition presents an opportunity, being both attractive strategically (given the sizeable landbank under one title) and financially to the group to venture into the oil palm plantation sector, that has the ability to generate a steady flow and recurring source of income over a long period of time, through good agricultural practice.

“The proposed acquisition is expected to contribute positively to the future revenue growth and earnings of Puncak,” it noted.

Puncak Niaga has been in search of new businesses following the disposal of its water assets to the Selangor government for RM1.56 billion.

In April 2016, Puncak Niaga’s announced plans to acquire the businesses of construction and property firm TRIplc Bhd, a company which its executive chairman Tan Sri Rozali Ismail himself owns a substantial stake. They have until November to sign a definitive agreement for the deal.

The group’s stock closed 1 sen lower yesterday at RM1.14 with some 399,000 shares changing hands.