KUALA LUMPUR (May 3): Plantation company WTK Holdings Bhd is raising its stake in Sarawak-based rival Durafarm Sdn Bhd by another 15% for RM28.33 million.

The company has signed share sale agreements with Datuk Robert Lawson Chuat to acquire his 11.25% stake for RM21.45 million, and Edwin Ak Banta for his 3.75% stake for RM7.08 million, WTK said in a bourse filing on Friday.

“The proposed acquisitions are expected to allow WTK to account for additional profitability and cash flow,” the company said.

WTK had in January acquired a 70% stake in Durafarm that owns land measuring some 5,040 hectares, with 88.9% being planted areas and 7.85% earmarked for development.

The company highlighted that nearly half of Durafarm’s oil palm trees are categorised as young (under three years old) while 35.3% are categorised as young mature (between four to eight years old).

“As the oil palms enter into maturity and move into higher-yielding age bracket, Durafarm’s oil palm yields are poised to improve further and the growth momentum in its earnings is expected to continue,” said WTK.

None of Durafarm’s oil palm trees are currently in a prime maturity stage (aged between 9 to 14). Only 2.71% of its oil palm trees are in the mature stage (aged between 15 and 18), while as much as 13.4% are categorised as old (aged between 19 and 25).

However, WTK said it is expected to incur development expenditures to continue developing and maintaining the plantation estate following the acquisition.

Durafarm’s average fresh fruit bunch production has been declining over the past three financial years ending on July 31, falling from 41,147 metric tonnes in FY2021 to 32,848 metric tonnes in FY2022, and to 27,630 metric tonnes in FY2023.

WTK is also involved in the sales of timber, adhesive and gummed tapes, and frozen consumer products.

As a group, WTK reported a net loss of RM28.57 million for the financial quarter ended Dec 31, 2023 (4QFY2023), compared to a net loss of RM26.91 million in 4QFY2022, dragged by the change in fair value of biological assets in its timber business segment.

Revenue climbed 44.7% year-on-year to RM160.17 million from RM110.73 million, contributed by all of its major business segments.

At Friday’s market close, shares of WTK were up half a sen or 1.05% to 48 sen, valuing the group at RM231.05 million.