Subur Tiasa considers more timber asset sales

KUCHING: Subur Tiasa Holdings Bhd is looking to sell more timber-related assets after disposing of more than RM23mil worth of such assets to improve its capital efficiency.

The company is involved in logging and downstream timber processing, with manufacturing activities covering sawn timber, plywood, particleboard and charcoal – mainly for the export market.

It is also engaged in reforestation activities under five licences for planted forests in Sibu, Kapit, Bintulu and Miri.

The timber company has been loss-making, recording a pre-tax loss of RM26.2mil for the financial year ended Dec 31, 2024 (FY24).

“The company remains focused on streamlining its timber operations to enhance cost efficiency.

“As part of its ongoing rationalisation efforts, the group has been actively reviewing its timber-related machinery and assets to improve capital efficiency.

“As at Dec 31,2024, the group successfully disposed of RM23.2mil worth of idle assets.

“This initiative reflects a strategic move to reduce non-productive asset holding, enhance cash flow generation and re-allocate resources towards more promising and value-accretive business segments,” said Subur Tiasa.

The comprehensive review and disposal process will continue into FY25, with completion targeted within the next six and 18 months, respectively, it added.

Despite the losses, the timber segment’s cash outflows had been reduced by 30% last year as compared to 2023, reflecting its ongoing efforts to minimise financial exposure and optimise resource allocation.

Subur Tiasa’s audited financial statements for FY24 have been flagged with a material uncertainty by its independent auditor, Messrs Crowe Malaysia PLT, which highlighted that the company’s current liabilities exceeded its assets by RM393mil.

Last week, the auditors issued an unmodified audit opinion with a material uncertainty related to going concern for the Sibu-based company.

In FY24, Subur Tiasa’s other core business – oil palm plantations – had total borrowings of RM610.2mil, down from RM654.4mil in the previous year.

Of this, RM398mil (2023: RM423.3mil) are facilities subject to annual review, while the remainder consists of borrowings with fixed repayment terms.

The group also operates businesses in the manufacturing of polyethylene pipes and runs a Mercedes-Benz 2S and Mitsubishi Fuso 3S truck service centre in Kuching.

Subur Tiasa is confident that cash flows generated from its oil palm plantation segment are sufficient to service all fixed-term borrowings, including those linked to its timber operations.

The segment delivered a strong financial turnaround in FY24, recording a net profit of RM2.6mil, a reversal from a net loss of RM18mil in FY23.

This recovery was further supported by robust net operating cash inflows of RM74.4mil, driven by a 10% increase in the average crude palm oil prices.

Subur Tiasa said it has strategically focused on strengthening its oil palm plantation operations.

The company owns 23,505 ha of planted estates, of which 75% fall within the prime age range of eight to 18 years – considered the optimal period for peak yields.

Another 17% of the planted area comprises younger palms aged between three and seven years, positioning the group for strong future contributions to profitability and cash flow.

In FY24, the group produced 324,657 tonnes of fresh fruit bunches, maintaining an average yield of 17 tonnes per ha, a level that has consistently ranked among the highest in its peer group in the region.

The oil palm segment’s pre-tax profit surged to RM38.1mil (FY23: RM9mil), and contributed net operating cash inflows of RM86.7mil (RM68.8mil).

“With a favourable maturity profile and the ongoing execution of strategic agronomic initiatives, the group is well-positioned to further enhance cash flows while reducing operational costs,” it said.

It has maintained an optimistic outlook on the long-term prospects of the palm oil industry, underpinned by global population growth, rising per capita income and increasing demand for sustainable and certified palm oil.

“Growing awareness of palm oil’s nutritional value, along with its critical role in the food, olechemical and biodiesel sectors, particularly as countries push for renewable energy and carbon reduction targets, continues to reinforce its relevance in the global supply chain,” it added.

Subur Tiasa recorded strong net operating cash inflows of RM74.4mil in FY24, supported by continued operational discipline and favourable palm oil market conditions.

To further safeguard liquidity, it holds RM72.2mil in approved but unutilised credit facilities.

“Subur Tiasa’s debt-to-equity ratio improved from 0.97 in FY23 to 0.93 in FY24, reflecting its commitment to strengthening its balance sheet.

“This trend is expected to continue into FY25, in line with ongoing profitability and disciplined capital management.”

Management remains confident in the group’s ability to deliver improved operational performance and profitability, supported by steady cash flow generation for FY25, it added.