KUALA LUMPUR: Ekovest Bhd aims to transform into a conglomerate, focusing on three core businesses namely infrastructure and construction, property and plantation.
The company is in the midst of raising its stake in PLS Plantations Bhd to 57.38 per cent from 32.84 per cent currently.
Executive chairman Tan Sri Lim Kang Hoo said Ekovest was obliged to extend an unconditional mandatory general offer to buy all the remaining PLS shares and warrants not held by it upon completion of the shares sales agreements.
Lim said Ekovest's presence in PLS had enabled it to venture into the management and operation of oil palm and forest plantations, and more importantly in durian plantation, production, distribution and related businesses.
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He said raising Ekovest's stake in PLS was in line with the long-term strategy of expanding and diversifying into other businesses.
"Being a conglomerate will provide the diversified income streams for Ekovest to complement the cyclical nature of business risk.
"We aim to reduce dependency and reliance on our existing businesses in construction, property development and toll operations," he said in Ekovest's annual report 2020 released yesterday.
Meanwhile, Lim told the New Straits Times that PLS planned to buy or form a joint venture for over 200,000 hectares (ha) of agriculture land nationwide to improve its performance.
He said PLS was in negotiations with land owners for outright purchase of their property, or to form a joint venture.
"We are going into high-tech agroculture, agriculture and aqua. We are introducing cash crops. The majority of the land will be planted with durian trees, and the produce exported globally with the key market being China," he said.
PLS, traditionally an oil palm and timber company, ventured into the durian business two years ago to diversify its earnings streams and performance.
It acquired a company called Dulai Fruits, a downstream durian producer.
Dulai is one of the licence holders to export whole fruit durian to China.
Currently, PLS has close to 45,000ha of plantation land in Johor, of which about 600ha is planted with durians.
"We are expanding the durian business. We will produce durian-based products, pulp and paste, as well as sell fresh durians around the world. We are investing in this as we believe that it will be lucrative and having long term recurrent incomes.
"Durian trees have longer survival rates of about 200 years before any replanting is required as compared to oil palm which needs replanting when it reaches about 35 years.
"However the setback is durian trees take about five to seven years to start yielding. During the interim period, what we are doing is planting other crops," Lim said.
PLS has a joint venture with a state-owned enterprise of China which serves as the off takers.
The company works closely with the Chinese group to develop the durian business in China and Hong Kong.
Lim expects the durian segment to overtake PLS' oil palm plantation earnings in the next three to five years.
He said the durian segment currently contributes some 26 per cent of PLS' total earnings, and the contribution is only from downstream activities, which involves trading of processed durian products.
At Bursa Malaysia on Wednesday, PLS shares were traded at 86 sen, valuing the company at about RM313 million.
For the year ended June 30, 2020 (FY 2020), Ekovest registered a revenue of RM1.27 billion, slightly lower by 5.02 per cent compared to RM1.34 billion recorded in FY2019.
Revenue fell marginally due to lower construction work recognised for DUKE Phase 3 and the River of Life projects as a result of the Movement Control Order imposed on March 18, 2020.
Lim expects key national projects to contribute to the group's revenue from next year.
Ekovest has also entered into a strategic collaboration with China Railway Dongfang Group to look at construction, development, infrastructure, airport and seaport development projects in Malaysia and the Asia-Pacific region, he said.