KUALA LUMPUR: Johor-based PLS Plantations Bhd shareholders have approved the oil palm and timber company’s diversification into durian business via the acquisition of a 70 per cent stake in Dulai Fruits Enterprise Sdn Bhd for RM21
PLS executive chairman Tan Sri Lim Kang Hoo said shareholders were happy and there was “unanimous approval for PLS diversification into the durian business.”
PLS has been bleeding losses for the past three years but Lim is optimistic of the company breaking even in the current year ending March 2019.
He expressed his optimism of the acquisition because the deal comes with a RM10 million profit guarantee for the next three years.
Lim was speaking to reporters after the company's shareholders meeting here today. Also present were PLS executive director Lee Hun Kheng and Dulai Fruits managing director Eric Chan.
It was recently reported that Musang King durians could be retailed for as high as US$73 (RM300) per kilogramme in China.
In view of soaring durian demand in China, Lee is optimistic of PLS benefiting from Dulai Fruit’s durian export sales to other markets such as the US, Japan and Hong Kong.
The acquisition would be paid via an issuance of 24 million PLS shares at 75 sen per unit totalling RM18 million and RM3 million in cash, through subscription of 600,000 new shares in Dulai Fruits.
Dulai Fruits is a licenced durian exporter to China, air freighting bestsellers such as Musang King and D24 in frozen or chilled format.
Currently, PLS’ planted oil palm amounting to 11,000 hectares are concentrated in Johor and the trees are starting their prime ages of fruiting.
With crude palm oil futures averaging at RM2,100 per tonne since the start of this year, Lim admitted the returns from durian cultivation for export is much higher. “We feel it is good timing for PLS to diversify its earnings.”
Apart from oil palms, PLS, via its 70 per cent-owned unit Aramijaya Sdn Bhd, also operates and maintains 35,223ha of forest plantation at Kota Tinggi and Mersing in Johor.
Last week, construction and property developer Ekovest Bhd announced to the stock market it was buying a 23.42 per cent in PLS for RM76.5 million.
The corporate move will transform Ekovest into a larger listed conglomerate.
Lim, who is a common shareholder at both Ekovest and PLS, said he wants to streamline PLS’ business into Ekovest.
When asked if Ekovest wants to make a general offer for PLS, he said: “We don't know yet.”