Fresh from its Jan 17 2017 listing on Bursa Malaysia, the plantation group is already looking at expanding its 1,096ha of planted oil palm in Johor. While it is normal for the company to acquire plantation land, it is interesting to note that it is making another attempt at the same plot, having failed to win the bid some three months earlier.
Among concerns raised by minority shareholders include the difference in terms of the price offered during the first bid and this round of negotiations. Matang was silent on the price tag of its first bid.
However, there were more details in the company’s second bid to acquire the oil palm land and palm oil mill on July 18 2017. The company announced it has signed a letter of intent (LOI) with two companies – Raub Mining & Development Company Sdn Bhd (RMDC), and Raub Oil Mill Sdn Bhd (ROM) – to acquire two adjoining parcels of land in Raub, Pahang, for RM180 mil. The two plots measure a total of 1,707ha with oil palm trees and a 60-tonne per hour palm oil mill.
Matang’s first attempt was on April 19 2017 when it announced it had submitted a tender to RMDC and ROM to acquire the two plots of leasehold oil palm land and palm oil mill.
But before the decision was announced, the company said on May 11 that its April 2017 tender was unsuccessful and its deposit had been returned.
Based on Companies Commission of Malaysia (CCM) filings, RMDC is predominantly controlled by former Malaysian Chinese Association (MCA) secretary-general Tan Sri Kam Woon Wah via several private entities. MCA-controlled Huaren Holdings Sdn Bhd owned 10.76% in Matang as at Aug 23 2017.
Shareholders are asking what changed in the three months since its first bid. And if the price was the reason Matang was unsuccessful in May 2017, does this mean the company has upped its offer price since then? What happened during the tender process in May 2017? Was there no successful bidder earlier? Is the company paying a reasonable price for the assets?
In the event the deal materialises, Matang will likely need to raise funds, given its cash hoard of RM33.65 mil as at March 31 2017.
For FY17 ended June 30, it posted net profits of RM1.25 mil on the back of RM9.67 mil in revenue.
Based on the proposed acquisition price, the company will pay around RM105,448 per ha for the plantation land. For the purpose of comparison, KUB Malaysia Bhd recently completed a deal to acquire 1,534ha in Sabah from Kwantas Plantations Sdn Bhd for RM100.44 mil or RM65,475 per ha.
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