Business

Saturday May 30, 2009

Hap Seng to beef up fertiliser business in Malaysia and Indonesia


KUALA LUMPUR: Diversified group Hap Seng Consolidated Bhd will continue to strengthen its fertiliser business in Indonesia and Malaysia while eyeing new markets in the South-East Asia region.

Datuk Edward Lee ... Hap Seng is now the top two fertiliser suppliers in Indonesia

Managing director Datuk Edward Lee said the group would focus on Indonesia given its aggressive oil palm cultivation as reflected by the significant hectarage increase over the years. “Hap Seng is now among the top two fertiliser suppliers in Indonesia, with warehouses and strong distribution network after just three years in operation and with about 22% market share in murate of potash (MOP) there,” Lee said after the company AGM and EGM yesterday.

Last year, the group supplied about 490,000 tonnes of fertiliser to Indonesia.

Given the more competitive environment, especially logistics, in Indonesia, Hap Seng would normally hold over three months’ fertiliser inventory for the market, Lee added. In Malaysia, Hap Seng supplied about 650,000 tonnes of fertiliser last year and, to date, has captured about 30% of the local MOP market.

Lee said the fundamentals for fertiliser looked good given the increasing food production globally, with the prices of most soft commodities like crude palm oil and grains, improving in the second quarter.

On its property division, Hap Seng wanted to remain as the market leader in landed property development in east Malaysia, he said, adding: “We believe our new township projects in Lahad Datu and Tawau will contribute positively to our group.”

Lee said the group also had about 2,100 acres in Sabah and over 500 acres in Sepang for its future property development projects.

On the group’s building, Menara Hap Seng in Kuala Lumpur, he said: “The tenancy rate is very healthy with our tower block securing 97% occupancy and the podium block about 91% occupancy.”

He said the group planned to look at niche development whereby it could enhance the value of the building via refurbishment thus securing better occupancy and rental rates.

On Hap Seng’s automotive division, Lee said the group was targeting 30% share of the Klang Valley’s Mercedes-Benz market.

“We were affected by the slowdown in the luxurious car marhet at end-2008 and early 2009, but there was a significant pick-up in sales over the past two months,” he added.

Hap Seng operates Mercedes-Benz dealerships in the Klang Valley through its state-of-the art Mercedes-Benz Autohaus showroom in KL and 25 Service Center at Kinrara Industrial Park, Puchong. Its auto division is also the exclusive dealer of Mercedes-Benz vehicles and Mitsubishi Fuso trucks in Sabah and Sarawak.

As for the group’s plantation activities undertaken by its 51.55% listed subsidiary, Hap Seng Plantations Holdings Bhd, Lee said they would continue to remain a major contributor to the group’s profits.

Hap Seng posted a net profit of RM17.4mil, or 3.09 sen per share, in the first quarter ended March 31 compared with RM62mil, or 11.02 sen per share, a year ago.

It told Bursa Malaysia yesterday that the drop in profit was mainly due to lower contribution from its fertiliser trading division.


HAPSENG : [Stock Watch] [News]

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