30 Oct 2007
PUTRAJAYA: IOI Corp Bhd, which is in the midst of finalising an asset acquisition, expects to post another record net profit for the current financial year ending June 30, 2008 (FY08) of more than RM1.8bil, said executive chairman Tan Sri Lee Shin Cheng.
Lee said it had sold forward half of the crop production volume at the average price of RM2,500 per tonne, compared with RM1,700 per tonne in FY07.
“The RM800 jump in CPO (crude palm oil) price per tonne should be an indicator that the group would not only sustain its earnings growth, but also improve further,” he said.
“FY07 was a record (profit) year. This financial year (FY08) will be another record,'' Lee added.
IOI Corp posted a net profit of RM1.48bil in FY07, up 79% from RM829mil in FY06. Revenue grew to RM8.95bil from RM6.1bil previously. The group's crop production for FY07 was 3.69 million tonnes.
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IOI Propeties Chairman Tan Sri Lee reply to media after chaired AGM and EGM in Putrajaya on Monday |
“Whatever goes up must come down,” Lee said when asked if the uptrend in CPO price was sustainable at current levels.
He expected the correction of CPO prices would not be too drastic in the event of one due to the growing demand for palm-based products worldwide.
“CPO is no longer a commodity. It is an industrial product. Exports to the US have doubled because of the trans fatty acid issue,” he said.
Bullish CPO futures which surged to a record high of RM2,910 per tonne yesterday gave IOI Corp share price a timely lift to boost the stock to a historical high of RM7.50, a rise of 35 sen.
On the its expansion plans, Lee said the oil palm plantation group was currently in talks to acquire a plantation company. “It looks like it (the acquisition) will be completed in FY08,” he told a press conference after the AGMs of IOI Corp Bhd and IOI Properties Bhd yesterday.
He also said the group would consider the 57% stake in Unico-Desa Plantations Bhd offered for sale by Unico Holdings Bhd and two major shareholders.
“I would get my board members to look into Unico-Desa,” Lee said, but stressed that IOI Corp would not launch any “unfriendly takeover.”
Given an annual cash flow of RM2bil, Lee said financing was not an issue for the IOI group.
“We've got the appetite (for asset acquisition). We are looking for bigger companies than Unico-Desa,” he added.
On the group's property division, Lee said IOI Property wanted to build more commercial properties to pave the way for it to set up a real estate investment trust (REIT).
“We only have about one million sq ft of rentable area in IOI Mall, which is too little. We intend to raise it by 30% to 40% before we could set up a REIT,” he added.
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