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Boustead: RM9b combat ship deal to buoy earnings

PETALING JAYA: Boustead Holdings Bhd is hopeful of doing better this year as its shipbuilding unit steps up implementation of the RM9 billion job to build six littoral combat ships for the Defence Ministry.

“We hope to achieve better results this year as we step up the fabrication of the littoral combat ships,” said Boustead Holdings deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin.

Out of its six core businesses, oil palm planting is the biggest earnings contributor, followed by shipbuilding and property development. 

Last year, Boustead’s earnings shrunk as palm oil prices fell. In the last six months, the third month benchmark palm oil futures on the Malaysian Derivatives Exchanges had been trading at low levels of between RM2,200 and RM2,500 per tonne.

The government had proposed the setting up of a consortium to re-ignite the country’s dying biodiesel sector by trimming national stockpile and supporting palm oil prices.

Named Biodiesel Malaysia Sdn Bhd, the consortium is 30 per cent-owned by Felda Global Ventures Holdings Bhd while Sime Darby Bhd will hold 20 per cent. The remaining 50 per cent is reserved for industry stakeholders, including plantation companies, biodiesel players and oil companies.

Asked if Boustead’s fuel retailing arm, Boustead Petroleum Marketing Sdn Bhd, is keen to take up a stake in Biodiesel Malaysia, Lodin said: “If the biodiesel distribution venture can bring in good returns, why not? We’ll need to assess the details”.

Last year, Malaysia produced about 130,000 tonnes of palm-based biodiesel, of which 100,000 tonnes were for domestic consumption and only 30,000 tonnes exported.

Lodin was speaking to reporters after the group’s shareholders meeting held here yesterday. Also present were chairman Jen. (B) Tan Sri Ghazali Che Mat, director Datuk Ghazali Mohd Ali, group finance director Daniel Ebinesan, heads of business divisions Laksamana Madya Tan Sri Ahmad Ramli Mohd Nor, Chow Kok Choy, Datuk Koo Hock Fee and Tan Kim Thiam.

To another query if Boustead’s banking arm, Affin Holdings Bhd, is still keen to acquire Hwang-DBS (M) Bhd, Lodin said the group had submitted its request to Bank Negara Malaysia to start negotiations.

“Hwang-DBS operations are complementary to that of Affin. We’re hopeful that we stand a good chance to be chosen as acquirer. We’re awaiting the central bank’s approval,” he said.

Affin’s major shareholders are the Armed Forces Pension Fund or Lembaga Tabung Angkatan Tentera (LTAT) (35.2 per cent), The Bank of East Asia Ltd (23.5 per cent) and Boustead Holdings Bhd (20.7 per cent). The Employees Provident Fund owns some seven per cent of the group.

On property development, Lodin maintained that Boustead’s RM160 million purchase of a 200-acre plot in Bukit Raja, Klang, is not a political bailout. 

“It was a commercial decision and it worked out to be RM18.40 per sq ft, a fair price for our shareholders. We had actually set our sights on that land since 2005 as it is located next to our existing 700-acre plot. We’re looking to reap economies of scale in developing this 900-acre plot in the near future,” he said. 

Asked if LTAT, which owns 61.8 per cent of Boustead, may want to loosen its grip on its flagship investment arm, Lodin, who is also LTAT chief executive officer, said: “It is good to have liquidity. LTAT will do so at the right time and right price and make some capital gains along the way”.

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