1st Quarter 2013 - ChartNexusir2.chartnexus.com/thplantation/doc/presentation/THP-1Q13...Tabung Haji...

1 TH PLANTATIONS BERHAD(Company No: 12696-M)

1st Quarter 2013Analyst/Investor Briefing

TH PLANTATIONS BERHAD(Company No: 12696-M)

Dato’ Zainal Azwar Zainal AminuddinChief Executive Officer


Presentation Outline

Growth: Shaping up for future demand

Strengthening our core business

1Q13 financial results

2

3

1

Reaching for Greater

Heights


Overview of 1Q13 financial results

• From acquisitions of Hydroflow, THLSS, TH Bakti

Bigger landbank, higher matured area

• Driven by bigger land bank and matured areas

Higher production of FFB and CPO

• Prices lower by 34% to 42%, offsetting higher production

Significantly lower selling prices

• Amortisation of acquired lands and their PDE

Higher non-cash costs arising from acquisitions


0

20,000

40,000

60,000

80,000

100,000

2011 2012 Current

39,4

43

91,0

78

97,5

92

Land bank has more than doubled

§Acquisition of 70% equity interest from Sawit Green§Acquisition completed in

July 2012

Hydroflow

§Acquisition of 70% equity interest from LembagaTabung Haji §Acquisition completed in

November 2012

TH Bakti

§Acquisition of entire equity interest from LembagaTabung Haji §Acquisition completed in

November 2012

THLSS

§Acquisition of entire equity interest from a consortium of investors including WeidaBhd§Acquisition completed in

March 2013

MajuWarisanmas &

Bumi SuriaVentures

§Acquisition of 93% interest in PT PKP§Awaiting regulatory

approvals

PT PersadaKencana

Prima


Overview of Profit & Loss (RM ‘000) 1Q13 1Q12Revenue 89,453 95,046

Sales of CPO 67,024 67,841Sales of PK 9,173 13,501Sales of FFB 9,546 8,680Management fees 3,710 5,024Dividend - -

Cost of Sales (60,965) (59,463)Gross Profit before Amortisation 28,488 35,583Amortisation (13,479) (5,948)Gross Profit 15,009 29,635Other Expenses (10,751) (5,918)

Admin expenses (4,577) (2,759)Other operating expenses (1,248) (391)Depreciation (297) (245)Finance costs (4,630) (1,814)Zakat - (711)

Other Income 792 1,389Profit Before Tax 5,049 25,104Tax (1,200) (9,358)Profit After Tax 6,249 15,746PATAMI 3,209 13,066Earnings per share (sen) - Basic 0.44 2.53Earnings per share (sen) - Diluted 0.43 2.44

Revenue down by 6%, mainly due to lower selling prices

Cost of sales up by 2.5%, in line with enlarged land bank

Other expenses higher by 66%, due to higher finance costs and

expenses on corporate exercises

Amortisation 127% higher due to enlarged land bank

PAT hit by lower selling prices, exacerbated by higher non-cash

amortisation costs

Gross profit (excl amortisation) down by 20%, in line with industry


Higher production significantly offset by lower prices

1Q12 1Q13AmortisationLower Op ExpPriceOther

ExpProduction

25,105

+23,841 -47,482

+16,985 -7,531

-5,868

5,050

RM ‘000


A closer look at revenue

Mature Area (ha)23

,158

32,5

40

1Q12 1Q13

+41%

FFB Production (MT)

104,

391

159,

036

1Q12 1Q13

+52%

CPO Production (MT)

22,6

06

29,5

58

1Q12 1Q13

+31%

FFB Processed (MT)

111,

994

145,

362

1Q12 1Q13

+30%

CPO Sales (MT)

22,0

55 32,9

40

1Q12 1Q13

+49%

PK Production (MT)

6,74

2 7,3

83

1Q12 1Q13

+10%


A closer look at revenue

FFB Yield (MT/ha)

4.51

4.89

1Q12 1Q13

+8%

KER (%)

6.02

5.08

1Q12 1Q13

0.94 ppt

OER (%)

20.1

8

20.3

3

1Q12 1Q13

+0.15ppt


FFB contribution by region

34%

35%

31%

1Q 2013

48%

13%

39%

1Q 2012

Peninsular

Sabah

Sarawak

PeninsularSabah

Sarawak

Higher contribution from the Sarawak region following acquisitions made in 2012


Higher proportion of younger palms

16%

19%

26%

39% Old Mature(20 – 25 years)

Young Mature(4 – 9 years)

Prime Mature(10 – 19 years)

Old Mature( > 25 years)


Replanting Programme – Status Update

2013 Replanting Ha As at March13 Remarks

Sungai Tenegang 334 - Expected to start in July 2013Sungai Koyah 451 -

Total 785 -

2012 Replanting Ha As at March13 RemarksBukit Lawiang 267 267

Completed - December 2012Gunung Sumalayang 250 250Ulu Chukai 267 112 Expected to complete by June 2013Sungai Buan 274 274

Completed – March 2013Sungai Merchong 240 240Sungai Tenegang 350 350 Completed - November 2012Sungai Koyah 396 396

Total 2,044 1,889 (95%)


THP mills outperformed its peers

19.9

6

19.2

1

19.8

4

19.5

4

20.4

8

21.9

4

19.6

6

19.5

0*

19.3

3

20.0

0*

20.2

6

20.3

1

15

16

17

18

19

20

21

22

Kota Bahagia Bukit Lawiang Pasir Besar Sungai Tenegang Mamahat Gedong

THP Area Average

Oil

Extr

actio

n Ra

te (O

ER) (

%)

Bukit Lawiang and Sg Tenegang mills achieved lower OER compared to respective area average due to age profile of surrounding estates, which are in

the course of/due for replanting.

*Estimates


Lower revenues mainly driven by prices

1Q13 1Q12

CPO RM2,035 RM3,076

PK RM1,115 RM1,935

FFB RM346 RM579

-34%

-42%

-40%


A closer look at expenditure

• Estate production cost up by 5%• Mill manufacturing cost up by 40%• Depreciation costs up by 32%• Amortisation costs up by 127%

• Admin expenses up by 66%• Other operating expenses up by 223%• Finance costs up by 155%

Attributed to enlarged land bank and associated costs/charges of

those acquisitions

1,27

5

1,14

3

1Q12 1Q13

Production Cost (RM/MT)

-10%


How are our assets amortised? (FRS3)

Acquired Land Bank

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Yield Profile against Year of Maturity

Plantation Development Expenditure

Land

Fair Value

At Cost

Fair Value

At Cost

Straight line basis over lease period

Straight line basis overremaining lease period

Based on estimated yield production method

Based on estimated yield production method


Hence, amortisation will now be higher

4.35 5.21 4.59

24.15 23.61 23.2926.55

52.00*

304360

190

9991,047 1,016

815

1,300*

0

200

400

600

800

1,000

1,200

1,400

0

10

20

30

40

50

60

2006 2007 2008 2009 2010 2011 2012 2013

Amortisation Amortisation/Ha

Amor

tisat

ion

(RM

mil)

Amortisation/Ha (RM

)

*Estimates


So why grow at all?

Given the growing world population and per capita income, it has been projected that palm oil demand would continue to

increase from 45 million tonnes in 2010 to 60 million tonnes in 2015, and hitting a whopping 75 milllion tonnes in 2020.

-source: The Star (Commodities Talk) – 27th May 2013

Demand for palm oil expected to increase


Our land bank has grown significantly

15,746

28,730

39,059 39,159 39,113 39,372

91,078 97,592

2006 2007 2008 2009 2010 2011 2012 Current

Land bank (Ha)


Enlarged land bank to catalyse future FFB growth

321,233 286,723

347,547

519,290

463,949

513,276 524,665

823,825

1,014,477

1,191,174

1,326,855

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

-

10,000

20,000

30,000

40,000

50,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

FFB production will grow at a CAGR* of 17.2% from 2013-2016

Mat

ured

are

as (H

a)FFB production (M

T)


We can now consider a full-fledged secondary crop

Key Considerations

Existing supply

Historical price trend

Demand forecast

Future price

forecast

Internal expertise

Soil suitability

With an enlarged land bank, we are better positioned to go full phase on dual-cropping


We can also explore mid/down-stream opportunities

UPS

TREA

MM

ID/

DOW

NST

REAM

THP is currently a pure upstream plantation player

Opportunities that are being explored:Ø Refinery Ø Kernel crushing Ø Manufacturing of food products,

oleochemicals and biodiesel


Strengthening our core businessDeriving maximum value from our assets


GROWTH

Strengthening our core business

Humanisingbusiness

operations

Development of plantable

reserves

Enhancing the value of

planted areas

Exploring prospective land banks

1 2

3 4


Improve replanting materials and methods


planted areas

1


Optimise average age and mature/immature ratio

Accelerate replanting programme

Acquisition of new brownfields with young palms

2-pronged approach to optimising age profile

and mature/immature ratio


planted areas

1

12 yrs

11 yrs

10 yrs 10 yrs

9

10

11

12

13

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2013 2014 2015 2016

Immature Mature Age


Enhance use of innovation and technology

Morning Roll Call

Checker Bunch CountFFB Grading

Crop DispatchStore

Guard Patrolling for APs


planted areas

1


Intensify mechanisation

(35) – 2x (272) (32) - 10x

(22) (78) (16)


planted areas

1


Develop plantable reserves

Sizeable plantable reserves

• Newly-acquired greenfields• Pockets of undeveloped lands within

acquired brownfields• Pockets of lands within the Native

Customary Rights areas (to work hand-in-hand with the natives to develop those areas)

Our aim is to develop all of our plantable reserves within the next 5 years

Development of plantable

reserves

2


Explore prospective land banks

Medium-term:Opportunistic acquisitions forü Sizeable landsü Green fields or brown fieldsü In line with business strategies

Short-term:Acquisition of

PT Persada KencanaPrima

increases our landbank to ~110,000Ha

Longer-term:Expansion into similar climate, similar industry environment eg Indonesia and Papua New Guinea

OUR FOCUS:

Ø Consolidating our position Ø Streamlining our

operations, andØ Deriving maximum value

from existing land bank

Exploring prospective land banks3


Thank You

Our vision is to be an integrated and sustainable plantation player

with global recognition, promising premium quality products

For further information/queries, please email [email protected]

TH PLANTATIONS BERHAD(Company No: 12696-M)

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