Greenyield optimistic about future on healthy demand, higher natural rubber prices

NST Wed, Jun 08, 2022 03:56pm - 2 months View Original

Executive director Tham Kin On said Greenyield remained positive on its outlook underpinned by healthy demand and higher natural rubber prices.

KUALA LUMPUR: Natural rubber prices have generally been on uptrend, and this in turn, said Greenyield Bhd, has benefitted the company as it sells inputs to rubber plantations, besides owning rubber estates.

Executive director Tham Kin On said Greenyield remained positive on its outlook underpinned by healthy demand and higher natural rubber prices.

Tham said the company's plantation inputs segment included products such as its proprietary RRIMFLOW yield enhancement system, chemicals and fertilisers, and tools and equipment.

"Meanwhile, our household goods division, which primarily sells Artstone plant pots, sees demand from our key export markets, the United States and Europe, remaining robust as well," Tham said after Greenyield's annual general meeting today.

"Having said that, we are also cognisant of the headwinds faced, for instance, the rising raw material prices and sustained inflationary pressures in the US and Europe, which may limit our ability to pass on the cost increases to our customers," he added.

He added that the soft ringgit was favourable to Greenyield given that about 90 per cent of its revenue was derived from outside Malaysia.

"Looking ahead, we believe the demand for commodities such as rubber will continue to rise and we want to capitalise on this by enhancing our presence in the upstream segment."

Tham said Greenyield's recently-proposed acquisition of a 65 per cent stake in Greenyield Rubber Holdings (M) Ltd was in line with the aspiration.

Greenyield Rubber owns 15,313 hectares in Papua New Guinea comprising 6,450ha plantable area for rubber with 3,513ha planted, and 3,613ha plantable area for coconut,

"This is not only aligned with our long-term strategy to expand our plantation business but also provides us with ownership of freehold and leasehold lands in PNG, which are scarce in nature," Tham added.

Presently, Greenyield owns and manages 1,200ha of rubber plantations in Kelantan that contributed revenue of RM1.4 million in its financial year ended December 31 2021.

The company expects the contribution to improve as more rubber trees mature.

Tham said the proposed acquisition also enabled Greenyield to diversify its plantation portfolio to include coconut given the sizeable plantable area for coconut.

"We are also able to create synergies using our products and technology to increase yields. The proposed acquisition is currently pending issuance of a circular followed by an Extraordinary General Meeting to be convened thereafter," he added.

Greenyield recorded a net profit of RM5.4 million on the back of RM45.4 million revenue in FY2021.

For the first quarter ended March 31 2022, its turnover increased 42.1 per cent year-on-year to RM15.0 million, while net profit remained similar at RM2.0 million.

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