BHB said yesterday the Securities Commission had approved of BPB’s initial public offering (IPO) which is slated for listing in the second quarter of this year.
About 28 per cent of BPB, or 163.6 million shares, will be allocated to institutional investors and the rest for retail investors.
The retail tranche consists of 492.4 million shares, of which 42 per cent will be allocated to BHB shareholders and 35 per cent to previous Boustead REIT investors.
Basically, the restricted offer is fixed at three BPB shares for every five Boustead REIT shares and one BPB share for every five BHB shares.
BHB said those who apply for at least 100 shares will be guaranteed an allocation of 100 shares.
Any remaining shares will be allocated to entitled BHB shareholders who apply in excess of 100 shares, on a pro-rata basis according to their respective shareholdings in BHB as per the entitlement date to be announced later.
“BPB’s listing will allow us to unlock the value of our investments. Existing BHP shareholders and potential new shareholders will have the opportunity to take part in our good track record of delivering sustained earnings,” said BHB deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin.
Upon listing, BPB’s total enlarged and paid-up share capital will comprise 1.6 billion shares amounting to RM800 million. BPB is selling up to 656 million shares of its enlarged 1.6 billion share base, comprising 580 new million shares and 76 million existing shares offered by its parent.
Lodin said parent BHB will keep a controlling 59 per cent stake in BPB, which has committed a dividend payout of at least 60 per cent of its profit.
So far, BPB’s IPO is the only palm oil-linked listing slated for the year. As palm oil prices are on the uptrend, keen investor interests are expected on pure plantation counters such as BPB.
In terms of tree age profile, BPB’s mature and maturing trees, which are between four and 20 years old, make up 77 per cent of its planted area. Immature oil palms of between zero and three years make up nine per cent of its planted area and the balance 13.8 per cent are trees that are past their prime.
To stem any decline in its fresh fruit bunch output, Lodin said in five years, BPB will seek to grow its 71,092.7ha planted area by another 20,000ha.
Palm oil millers are seen to be practical enablers in using more homegrown technology and content.
“The National RE Policy and Action Plan 2009 is due for a revision to chart the way forward. Currently, the biggest allocation of RE quota goes to solar power but this sector is highly dependent on foreign technology and imports,” said Sustainable Energy Development Authority (Seda) chief executive officer Badriyah Abdul Malek.
“There’s a need to re-focus the RE industry to add more value to our economy. In moving towards a knowledge-based and service-oriented economy, we want to encourage more use of local technology and content. We see palm oil millers as key enablers of this vision,” she said.
Energy, Green Technology and Water Deputy Minister Datuk Seri Mahdzir Khalid had earlier officiated at the Second International Sustainable Energy Summit 2014, here, yesterday.
Seda, a government agency under the ministry, is a one-stop centre that facilitates supply and RE usage in Malaysia via feed-in tariff (FiT).
The FiT guarantees RE producers a premium selling price over that generated from depleting and finite sources such as oil, gas and coal. Power generated from renewable sources, such as oil palm biomass, biogas, mini-hydro and solar, are targeted to benefit from the FiT.
Currently, biomass and biogas only make up 37 per cent of the 536MW RE quota that had been allocated. Oil palm biomass and biogas plant operators, which had successfully bid for the RE quota and accorded licences by Seda, receive 32 sen per kWh under the FiT when they hook up to the national grid.
While acknowledging the sluggish take-up rate among biomass and biogas plant operators, Badriyah said the government is committed to re-balance RE developer interest towards this sector.
Asked if the government may raise the FiT for oil palm biomass and biogas plant operators, she replied: “We’re looking to revise the FiT degression rates and bonus incentives.” Mahdzir confirmed that changes to the FiT will be announced in the next quarter.
Degression rates reflect the falling cost of technologies, while bonus incentives spur developers to incorporate more homegrown know-how and local building materials in RE production.
Given the relatively limited FiT budget, which is funded by a 1.6 per cent levy on electricity bills of heavy users in Peninsular Malaysia and Sabah, Badriyah said it would be more realistic to spur more participation from the biomass and biogas sector.
Now, commercial coercion joins trade coercion to restrict growth of palm oil trade.
When it comes to commercial coercion, these activists are practised at pressuring consumer goods manufacturers, processors and traders to purchase only palm oil produced according to NGOs’ standards. Why go to such lengths?
Commercial coercion works. Major companies fear attacks on their brands. Some chief executives, for example of Unilever, the strongest business backer of the Roundtable on Sustainable Palm Oil (RSPO), even appear to enjoy being lauded by NGOs.
Does trade coercion work? Only if governments allow it to do so. Rules in trade agreements are quite strict.
The restrictions imposed by the European Union on imports of palm oil-based biodiesel are considered by trade experts as wholly in breach of World Trade Organisation (WTO) rules. The United States Environment Protection Agency is considering similar measures. They, too, would breach Malaysia’s WTO rights to supply the US market.
It is also probable that efforts by the backers of RSPO to pressure businesses to buy only its certified palm oil breach the Code of Practice attached to the WTO Agreement on Technical Barriers to Trade. It specifies non-governmental certification systems may create unnecessary obstacles to trade. Malaysia can seek to enforce this WTO agreement to ensure this does not occur.
Free trade means businesses are free to compete in foreign markets. The domestic cousin of free trade is free competition.
It is also clear that environmental NGOs are pressuring businesses, such as Wilmar, to deal only with palm oil producers whom they endorse. This is market coercion.
As well as exercising its rights as a member of the WTO to challenge restrictions by others on its palm oil exports, the Malaysian Government is fully entitled to adopt laws or regulations which penalise those who engage in any activity that clamps down the palm oil supply chain and producers’ livelihoods.
Normally, free marketers would not advise governments to increase business regulations. But when commercial entities willingly bow to coercion from NGOs to distort trade and markets, it is the consumers and producers who suffer; it is entirely appropriate for governments to adopt regulations which penalise businesses which are complicit in actions that restrict competition.
Alan Oxley is chairman of World Growth, an observer at the United Nations Climate Change Conferences. He formerly served as chairman of the General Agreement on Tariffs and Trade (GATT), the predecessor to the WTO.
Last Friday, the third month palm oil futures on Bursa Malaysia Derivative closed at RM2,796 per tonne. Planters welcome the prospects of higher exports, having braved through dismal pricings of between RM2,200 and RM2,500 in the first 10 months of 2013.
“Higher palm oil prices of around RM2,700 to RM2,800 per tonne this year should contribute to better export earnings,” said Sarawak Land Development Minister Tan Sri Dr James Jemut Masing.
He reiterated that Sarawak is steadfast in its commitment to raise the income and living standard of rural folks through oil palm development.
“Sarawak’s oil palm expansion programme will go ahead as planned. The rise in palm oil prices will help generate extra capital for smallholders to expand their oil palm plantings,” he told Business Times in a telephone interview from Kuching yesterday.
Malaysian Palm Oil Board’s data showed that Sarawak produced 3.1 million tonnes of crude palm oil (CPO) last year. “This year, with more trees maturing, we hope to achieve between five and 10 per cent output growth to 3.3 million tonnes,” Masing said.
In December 2013, Wilmar International Ltd signed a “No Deforestation, No Peat, No Exploitation” pledge in its palm oil trade with consumer goods giant Unilever Plc.
Wilmar’s refinery in Bintulu is the main buyer from 41 palm oil mills across Sarawak, absorbing 1.7 million tonnes of CPO, or 55 per cent of the state’s production.
In sourcing CPO to feed its refinery, Wilmar told planters in Sarawak that it will stop buying oil from palms planted in areas of “high carbon stock” and peat swamp after 2015.
This triggered the ire of planters in the state because Wilmar’s pledge prohibits cultivation of oil palm on peat land and confines the opening up of oil palm plantations to only young scrub and cleared/open areas.
Masing likened Wilmar’s unreasonable prohibitions on its palm oil suppliers to economic bullying. “This directive from Wilmar is very disastrous because it could stop the government’s poverty eradication programmes,” he said.
“The state government will not succumb to baseless allegations. I do not agree with the argument that planting oil palms in logged-over areas and peat swamps is bad for the environment,” he said, explaining that good peat soil management is the basis for sustainable food production and a preventive measure against the spread of fire.
“We need to differentiate between managed and unmanaged peat,” he said. He explained that land compaction and establishment of a trench system was a pre-requisite to any oil palm development in Sarawak’s peatland. A lot of effort goes into ensuring water levels in the maze of trenches is at 50cm to 75cm from the surface. This is achieved through a series of stops, weirs and water gates.
“Oil palm planters in Sarawak follow a set of proven, good agricultural practices that balances the needs of people, planet and profits,” he said.
Meanwhile, in an interesting Valentine’s Day twist, Masing noted Wilmar’s “unloving stance” towards its suppliers in Sarawak seemed to have made a U-turn and concede to logic.
In its February 14 letter to Sarawak Land Development Ministry, Wilmar chairman and chief executive officer Kuok Khoon Hong assured that Wilmar’s policy would not affect CPO purchases from oil palm planters which had previously developed large tracts of peat land.
Many people around the world are praying and anxiously waiting for every bit of progress in the search and rescue for those on board flight MH370.
Meanwhile, flights departing and arriving at Kuala Lumpur International Airport had begun to resume normalcy … with passengers and cabin crew paying more attention to keeping regular contact with their friends and families.
This is one of the most frequently shared photo on Facebook accounts that had triggered millions of “likes” – a drawing of a plane with multi-coloured hands reaching up with the caption, “Please come back”.
We must never lose hope in finding these 239 people.
Tyler was responding to queries whether the MH370 flight disappearance is causing loss of consumer confidence in Malaysia Airlines and triggering fear of flying among travellers all over the world.
“Last year, around 3.1 billion people travelled by air. This year we expect traffic to surpass 3.3 billion passengers. That is nine million people a day with over 6,000 people per minute boarding an aircraft. The global fleet travels some 70,000km each minute,” he said.
IATA represents some 240 airlines, comprising 84 per cent of global air traffic of which Malaysia Airlines is a member.
Heavyweight plantation counters like Sime Darby Bhd, IOI Corp Bhd, Felda Global Ventures Holdings Bhd, Kuala Lumpur Kepong Bhd (KLK) and Genting Plantations Bhd have started to climb and experienced profit-taking dips.
This week, pure upstream counters with young tree age profile are seen to be the main beneficiaries of the recovery in palm oil prices.
When contacted by Business Times, Maybank Investment Bank Bhd analyst Ong Chee Ting reiterated his view that crude palm oil (CPO) prices will remain relatively resilient due to biological tree stress and as the industry enters into seasonally lower production months from February to April.
Latest numbers from the Malaysian Palm Oil Board showed slowing production amid stable palm oil exports. Yesterday, the industry regulator said palm oil inventory fell to the lowest level since July 2013 amid low production season.
As at end-February 2014, the palm oil inventory settled at 1.66 million tonnes, much lower than market expectations of 1.8 million tonnes.
“We reckon that palm oil prices will stay relatively high at RM2,800 to RM2,900 per tonne over the next two months as the stockpile is tight,” Ong said. “Nonetheless, it is possible for palm oil prices to breach RM3,000 per tonne in the near term if the present weather condition does not improve over the next three weeks,” he added.
JF Apex Research, in its research note, said it is concerned that the prolonged dry spell in Malaysia could hurt CPO production in the mid-term. It maintained an “overweight” call on the plantation sector and its favourite counters include Genting Plantations, IJM Plantations Bhd and KLK.
Separately, RHB Investment Bank, in its notes to investors, noted the bullish tone of last week’s Palm and Lauric Oils Conference & Exhibition: Price Outlook 2014 is further fuelling the current CPO price rally.
Most of speakers at the conference believed that there is still upside potential for palm oil prices, with projections of RM3,000 per tonne by mid-2014. Should El Nino occur, this may drive prices beyond RM3,000 per tonne.
RHB Investment Bank feel that prices are expected to average at around RM2,700 per tonne this year. “We maintain our ‘overweight’ stance on the sector. We are still at the early stage of a bull market as valuations are still inexpensive. Funds have only just started to flow into the palm oil sector,” it said, adding that its top picks include IOI Corp and Jaya Tiasa Holdings Bhd.
A Malaysia Airlines flight carrying 227 passengers and 12 crew lost contact with air traffic controllers on Saturday en route from Kuala Lumpur to Beijing. The disappearance of a Malaysian jetliner is an “unprecedented aviation mystery” with a massive air and sea search now in its third day failing to find any confirmed trace of the plane or the 239 people aboard.
Flight MH370 was operated on a Boeing 777-200 aircraft. It departed Kuala Lumpur at 12.41 am on the 8th March 2014. The aircraft was scheduled to land at Beijing International Airport at 6.30am local Beijing time. Up until now, the authorities have yet to locate the missing aircraft. Let us spare a moment of our thoughts and pray for all on board MH370.
For business travelers who check in and out of Kuala Lumpur International Airport ever so frequently, flying will never be the same again.