Business Description:
Boustead Holdings Berhad. The Group's principal activities are warehousing and distributing fast moving consumer products for selected clients. Other activities include designing, constructing, upgrading, repairing and maintaining naval and merchant ships; planting and processing oil palm, as well as forestry and oil bulking installations; manufacturing cellulose fibre cement boards used for wide ranging ceiling and cladding applications; provision of commercial, Islamic and investment banking services, money broking, fund management, underwriting of general and life insurance business, and property investment and development. It is also involved in investment holding. Operations are carried out in Malaysia.
Wright Quality Rating: CBD1
A quick look at Boustead
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Tuesday April 6, 2010
Boustead to sell land in Sumatra for US$50m
By DANNY YAP
danny@thestar.com.my
KUALA LUMPUR: Diversified group Boustead Holdings Bhd, which is targeting to sell off its 17,000ha of plantation land in south-west Sumatra before year-end, hopes to raise about US$50mil from the sale. (=US 2,941 per ha) Deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin said over 50% of the land was currently planted with oil palm.
“We are on the lookout for buyers. If we get a good price we will sell,” he said told reporters after Boustead’s AGM and EGM yesterday.
On reasons for selling, Lodin said as it was a stand-alone plantation, there were logistics problems, and the company had no plans to expand it.
Lodin said Boustead would continue to hive off its non-core and non-performing assets to improve efficiency and also reduce bank borrowings.
He said Boustead had managed to dispose of its non-profitable businesses and non-core assets over the years which had helped to reduce its gearing. “Our gearing is currently 0.8 times, compared with 1.2 times in 2009.”
On dividends, Lodin said Boustead would continue with its quarterly dividend payout although it was not a written company policy. The payout was on condition it remained profitable.
For the financial year ended Dec 31, 2009 (FY09), Boustead paid out dividends net-of-tax amounting to 22.1 sen per share.
The total dividend payout of RM184mil represents 54% of its attributable profit and a 27% increase from the payout from FY08.
“This increase in dividend payout is sizeable given the enlarged share capital as a result of the rights issue undertaken during the third quarter last year to increase shareholder base,” he noted.
On Boustead’s performance, Lodin said despite a tough year in 2009, the company managed to post a respectable pretax profit of RM502mil, compared with RM679mil in 2008.
On the key performance indicator this year, he said Boustead targeted a return-on-equity of 10%, pre-tax return-on-asset of 7% and net dividend of 18 sen.
On its disposal of the 80% stake in BH Insurance (M) Bhd to AXA Affin General Insurance Bhd, Lodin said the company would gain RM363mil from the sale. In addition, Boustead would also rake in RM75mil profit from BH Insurance’s business prior to the stake sale.
“It was a good investment,” he said, adding that after the disposal of BH Insurance, it still maintained a 20% stake in Affin Bank.
On its business outlook, Lodin said all divisions looked good taking account of the improved global economic conditions. “We anticipate a better year,” he said, adding that Boustead would continue to focus on its six core business divisions - heavy industry, plantation, property, trading, finance and investment as well as manufacturing and services.
Lodin said the heavy industry division, especially shipbuilding, would continue to be the key driver of growth for the company.
He said the division now contributed about 30% to revenue, adding that the finance and investment division contributed about 20%, property 20%, plantation 15%, trading 10% and manufacturing 5%.
“We believe our plantation division can do better this year with crude palm oil prices on the uptrend. Another division that can perform better include finance and investment.”
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