Thursday, 12 June 2025

WTK acquires full ownership of DuraFarm

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KUCHING: WTK Holdings Bhd has raised its ownership in plantation firm DuraFarm Sdn Bhd to 100 per cent following the completion of the acquisition of the remaining 15 per cent equity interest in the latter.

WTK’s wholly-owned subsidiary, BioFarm Venture Sdn Bhd, completed the acquisition of 2.1 million shares (15 per cent) in DuraFarm held by Lembaga Amanah Kebajikan Masjid Negeri Sarawak for about RM28.328 million in cash on January 10, 2025, WTK said in a filing with Bursa Malaysia.

The purchase was financed by WTK Group’s internally generated funds (RM8,498,571) (30 per cent) and bank borrowings of RM19,830,000 (70 per cent).

To recap, BioFarm first acquired a 70 per cent equity interest in DuraFarm from Ocarina Development Sdn Bhd (in liquidation) for RM132 million in cash on January 5, 2024.

Subsequently, BioFarm bought another 15 per cent stake in DuraFarm from Datuk Robert Lawson Chuat (11.25 per cent) and Edwin Banta (3.75 per cent) for about RM28.328 million in cash in July, raising its stake in DuraFarm to 85 per cent.

DuraFarm is principally engaged in the business of planting and managing an oil palm plantation in Betong and Sri Aman, with the principal market for the sale of fresh fruit bunches (FFB).

The main assets of DuraFarm comprise 19 parcels of plantation land measuring a total of 5,040.97 hectares, of which approximately 4,137.24 hectares (82.07 per cent) have been fully planted with oil palm trees, and another 740.64 hectares (14.69 per cent) are under development for replanting.

The age profile of the planted areas comprises young mature oil palms (4 to 8 years) covering 1,581.81 hectares (38.23 per cent) and immature palms (0 to 3 years) covering 2,555.42 hectares (61.77 per cent).

In the financial year ended July 31, 2023 (FY2023), DuraFarm recorded an FFB production volume of 27,630 tonnes, down from 32,848 tonnes in FY2022. In FY2023, DuraFarm posted a lower after-tax profit of RM5.52 million (FY2022: RM13.45 million). The financial year of DuraFarm was later changed to December 31 from July 31.

For the financial period ended September 30, 2024, DuraFarm increased its revenue by 22.69 per cent to RM17.41 million from RM14.19 million registered a year ago, boosted by higher income from sales of FFB as a result of a higher average price of the fruits. However, the higher revenue did not translate into higher earnings, as the company’s after-tax profit instead dropped by 12.63 per cent to RM1.73 million from RM1.98 million, mainly due to higher manuring expenses incurred for the latest financial period under review, WTK explained.

WTK said as DuraFarm has a young crop profile, with approximately 61.77 per cent of the oil palm trees having an age profile of less than three years, DuraFarm’s oil palm yields are poised to improve further as the trees enter maturity and move into a higher-yielding age bracket. Therefore, the growth momentum of DuraFarm’s earnings is expected to continue in future financial years.

“As these immature and young oil palms mature, their yields will start to increase rapidly. The typical lifecycle of an oil palm runs from 25 to 30 years, with peak production cycles and yields recorded during their prime mature and mature stages from 9 to 18 years. As such, the medium-to-long-term prospects of DuraFarm plantation estate are favourable, as the WTK group will stand to benefit from revenue and profit contributions from DuraFarm as and when the planted oil palms mature and enter the peak FFB production cycle.

“Nevertheless, in view that 740.64 hectares are under development for replanting of new palm oil trees and that 61.77 per cent of the oil palm planted is immature, WTK is expected to incur plantation development expenditure for the continuing development and maintenance of the plantation estate after the completion of the proposed acquisition (from Lembaga Amanah Kebajikan Masjid Negeri Sarawak),” it said recently.

WTK said with the anticipated steady demand for crude palm oil (CPO) and increased production from the newly acquired BHB and DuraFarm plantations, the plantation business is expected to achieve satisfactory performance and serve as the growth catalyst for the group in FY2024.

WTK paid RM250 million in cash for the acquisition of BHB Plantation and an oil palm mill in Miri. The acquisition of BHB increased the group’s oil palm planted area by 5,042 hectares (34.54 per cent) to 16,428 hectares.

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