KUALA LUMPUR: Chin Teck Plantations Bhd expects palm oil prices to remain reasonably strong in the current year ending August 2018 on prospects of firm global demand, particularly from the world’s most populated nations; India and China.
“As a planter, Chin Teck’s profits is highly dependent on palm oil prices and the volume of oil palm fruits we sell to millers. As global demand for palm oil firm up, prices would rise,” said Chin Teck executive chairman Goh Wei Lei.
“This year, we expect our harvest volume of oil palm fruits across our estates in Malaysia and Indonesia to be pretty much the same as previously,” Goh told reporters after the company’s shareholders’ meeting here today.
“We’ve been in this business for almost 60 years and todate, our total planted area is around 32,000ha. Our cash position is healthy amounting to RM255 million and we’re looking to acquire suitable land to expand our plantation landbank,” he said.
India's burgeoning population of 1.35 billion consumes some 20 million tonnes of edible oils per year. Oilseed farmers supply some seven to eight million tonnes while traders import around 10 million tonnes palm oil per year from Malaysia and Indonesia.
In November 2017, the Indian government doubled the import duty on palm oil to 30 per cent from 15 per cent previously, to support its local oilseeds farmers. India had also increased the import tax on soya oil and sunflower oil to 30 per cent and 25 per cent from 17.5 per cent and 12.5 per cent, respectively.
Following India’s tax hike on palm oil, the shipments from Malaysia has reduced drastically. In a bid to normalised trade, Malaysia had, early this year, allowed duty free crude palm oil to be shipped out.
Last week, Prime Minister Datuk Seri Najib Razak, in his official visit to India, had requested Prime Minister Narendra Modi to reduce tax on palm oil. Modi reportedly said he will seriously consider the request.
China’s 1.42 billion population consumes some five million tonnes of imported palm oil per year. Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong reportedly said Malaysia will seek to meet key decision-makers in China in a bid to persuade more consumption of palm oil.
“India and China make up 30 per cent of the world’s seven billion population. These two nations, collectively, consume big amounts of palm oil annually,” Goh said.
“In the past couple of months, palm oil prices have come down. It is good that our government is working towards raising demand for palm oil. We hope to see India reducing tax on palm oil and China placing more orders,” he added.
In its filing to Bursa Malaysia yesterday, Chin Teck Plantations Bhd noted its first quarter net profit ended November 2017 dropped 14 per cent to RM13.59 million from RM15.73 million a year ago, dragged by foreign exchange losses and higher expenses.
Meanwhile, its first quarter revenue is relatively flat at RM42.51 million compared with RM42.46 million, previously. The group’s higher sales volume of fresh fruit bunches (FFB) and palm kernel were offset by lower selling prices for FFB, crude palm oil (CPO), and palm kernel.
Chin Teck’s single tier dividend of 10 sen per share — declared on Jan 2, 2018 — is being paid out today. Chief financial officer Gan Kok Tiong, who was also present at the media briefing, said the dividend payout makes up 43 per cent of the group’s profits.