KUALA LUMPUR (Oct 25): Greenyield Bhd, which is principally engaged in the manufacturing of agricultural and horticultural products, wants to diversify into rubber plantations, which it anticipates may contribute to at least a quarter of its net profit in the future.

In a bourse filing today, the group said the diversification will help reduce its reliance on its current core business as well as improve its earnings and shareholder value.

"Current low natural rubber prices provide an opportunity for the group to diversify into the rubber plantation ownership business in line with the group’s long-term view towards the future recovery of commodity prices which are known to experience significant downtrends and uptrends," Greenyield said.

It also said that given that it has been in the business of trading and manufacturing of plantation tools, chemicals and fertilisers, it will be able to use its own products, services, and technologies for its plantations, which will be expected to improve their economic prospects.

It has acquired three companies involved in the rubber plantation business, namely Tigantara Plantations Sdn Bhd, SND Teguh Enterprise Sdn Bhd and Pullah PC Daud Sdn Bhd.

The acquisitions of these companies, Greenyield said, has increased its plantation landbank from 400 hectares to 1,200 hectares, which is expected to provide the group a stable source of recurring income once the rubber trees reach maturity.

The proposed diversification will require the approval of its shareholders at an extraordinary general meeting to be convened some time in the fourth quarter of this year.

Notwithstanding the proposed diversification, Greenyield said it intends to continue with the its existing business in the same manner.

At Bursa Malaysia, Greenyield shares ended 0.5 sen or 4% higher at 13 sen today, valuing the group at RM43.39 million. The stock has been trading between 11 sen and 17 sen in the past 52 weeks.