FELDA Global said to eye Sarawak Plantation to grow oil palm landbank

KUALA LUMPUR, Aug 18 — FELDA Global Ventures Holdings Bhd (FGVH) is seeking to control Sarawak Plantation to increase its landbank with younger and more fruitful oil palm trees, The Edge Business and Financial Weekly reported in its latest edition today.

The profitable Sarawak Plantation, whose main stakeholders are Datuk Abdul Hameed Sepawi and the Sarawak state government, owns native customary rights (NCR) land.

FGVH is well-positioned to take over the Sarawak-based company because of its status as a government-linked company, an industry executive told The Edge Weekly.

“Only a government-linked company can do the deal with Sarawak Plantation because of the NCR land in its books. The ownership of the land, which belongs to the state, cannot go to private companies,” the unnamed executive was quoted as saying.

According to the weekly, Sarawak Plantation’s appeal lies in its younger trees that give a higher yield, with a quarter of its land having trees aged between only four and 10 years compared to FGVH’s ageing trees with a lowered yield that could impact its stock market performance in the months ahead.

A further 36.5 per cent of Sarawak Plantation trees are in the range of 11 and 15 years, while 10.4 per cent are between 16 and 20 years.

An analyst told the weekly paper that Sarawak Plantation’s “high output” could help lessen cuts to profits if prices of crude palm oil (CPO) drop. 

Just over half of FGVH’s trees are mature trees over 21 years old with low yield, but the company remains a top producer of crude palm oil globally due to its large landbank.

But another financial paper, Business Times (BT), today reported FGVH as denying reports of its intention to take on substantial shares in Sarawak Plantation.

“FGV is not in discussion with any party on acquiring a substantial stake in Sarawak Plantation Bhd,” the company said in a filing to Bursa Malaysia yesterday.

A company spokesman also told BT: “When FGV said it is pursuing various strategies to expand upstream business, it is a general statement. It does not refer to Sarawak Plantation (or, for that matter, any other organisation) specifically.”

On June 28, Putrajaya forged ahead with FELDA’s controversial public listing despite earlier criticism from some settlers and the opposition who claim that it will short-change some 112,000 FELDA settlers nationwide, a group which is seen to be an important vote bank for the ruling Barisan Nasional coalition.

Prime Minister Datuk Seri Najib Razak had given his assurance that the listing would yield profits, and earlier announced a RM1.69-billion “windfall” for all settlers throughout the country ahead of the FGVH listing.

FGVH’s listing is the world’s second largest initial public offering (IPO) this year after Facebook.

Its shares had reportedly remained above its debut price of RM5.30 more than two weeks after its listing.

But brokers have said that FGVH is likely benefiting from the interest of large institutional funds who expect the plantation giant to become a component of the benchmark FBM KLCI index, along with restrictions against cornerstone buyers disposing of their lots within six months of the listing.

Yesterday, FGVH share price was reported to be RM5.02 at the close of the stock market.