Matang to improve yield, cost efficiency

KUALA LUMPUR: MCA-linked plantation company Matang Bhd made its debut on the ACE Market of Bursa Malaysia yesterday at a 7.7.% premium, two years after a planned merger with Scope Industries Bhd fell flat.
Matang’s shares opened at 14 sen yesterday, up a sen or 7.7% over its issue price of 13 sen and hit a high of 15.5 sen before ending its maiden trading day at its opening price. It was the most active counter, with 303.9 million shares changing hands.
Speaking at its listing ceremony yesterday, Matang chairman Datuk Teh Kean Ming said the group will focus on improving its yield and cost efficiency in a move to boost revenue and profitability.
Matang is stepping up its replanting exercise in Matang Estate and at the same time increasing its fresh fruit bunch (FFB) yield through greater usage of fertilisers.
Teh said the group will spend RM9 million out of the RM16.9 million raised from the listing exercise to purchase fertilisers for the estate over the next five years.
“Over the next two years, we will purchase the high quality ‘Felda Yangambi’ line of germinated seeds to be used in our replanting exercise,” he said.
Teh noted that the Felda Yangambi germinated seeds are preferable due to their historically higher FFB yield.
This year, he said, the group targets to replant 16.4ha of its plantation area, as it seeks to improve the overall age profile of its oil palm trees.
Teh said its oil palm trees are generally replanted when they are above 24 years old and are low yielding, adding it will take about four years before its replanted oil palm trees mature and start producing FFB.
Currently, the group’s estate comprises 45 contiguous pieces of agricultural land located within the districts of Ledang and Segamat, Johor, covering a total of 1,096.3ha.
In addition, Teh said, the group will improve its operational efficiency by upgrading road infrastructure and water drainage system in its estate and purchase new equipment for its operations.
“These measures will make our estates more efficient, reduce costs and boost the group’s revenue and profitability,” he added.
In the first quarter ended Sept 30, 2016, Matang’s net profit stood at RM687,000, with a revenue of RM1.97 million.
On its outlook, Teh said he expects the performance of the industry as a whole this year to remain robust, attributable to the favourable crude palm oil (CPO) prices that are currently above RM3,000 (US$670) per tonne.
“On average, we expect the CPO price to remain above RM2,700 per tonne this year,” he said.
Furthermore, Teh said, the lower palm oil stockpile anticipated in the first quarter this year and the high biofuel mandate in the US will help to ensure demand for palm oil.
MCA (Malaysian Chinese Association) has a 12.09% stake in Matang, held via Rohua Sdn Bhd (1.18%) and Huaren Holdings Sdn Bhd (10.91%).