Rimbunan Sawit Streamlines Asset Base with RM28 Million Disposal of Non-Core Plantation Land

Kuala Lumpur — Sarawak-based oil palm producer Rimbunan Sawit Bhd has announced the sale of a large plantation estate in Miri for RM28 million in cash, as part of a broader strategy to improve operational efficiency and refocus capital on higher-performing assets.

The disposal involves a 1,504-hectare plantation estate in Batang Baram, held via its wholly owned subsidiary Sastat Holdings Sdn Bhd, and will be sold to Trinity Capital Resources Sdn Bhd under a conditional sale and purchase agreement.

Strategic Exit from Remote, Underperforming Asset

Rimbunan Sawit said the decision to divest the estate was driven by persistent cost inefficiencies linked to the land’s remote location. The plantation is not operationally integrated with the group’s other estates or mills, resulting in elevated logistics and transportation expenses that have continued to impact profitability.

By exiting the asset, the group will also avoid further capital expenditure required to rehabilitate the estate, allowing management to reallocate resources toward more productive and better-connected operations—a capital discipline approach similarly seen among owners of industrial land in Selangor and commercial property in KL, where asset integration and infrastructure access increasingly define value.

Financial Impact and Valuation Details

The estate was originally acquired in 2008 for RM30.8 million and had a net book value of RM18.1 million as at Dec 31, 2024. The group expects to record an estimated disposal loss of RM3.6 million on a pro-forma basis.

The agreed sale price represents a modest discount to the RM29 million market valuation assessed by an independent valuer. The land is held under a 60-year provisional lease expiring in 2068, with approximately 1,055 hectares currently planted. The estate has posted losses over recent financial periods.

Redeploying Capital to Higher-Yield Assets

Proceeds from the disposal will be channelled toward working capital requirements, transaction costs, and reinvestment into more commercially viable plantation estates within the next 12 months. This mirrors a broader market trend where owners divest inefficient assets to focus on scalable, infrastructure-ready locations—similar to capital rotation strategies seen in industrial property in the Subang area, factory developments in Puchong, and office space in Bukit Jalil.

Completion Timeline and Market Reaction

The transaction does not require shareholder approval but remains subject to consent from the Director of Lands and Surveys of Sarawak. Completion is expected in the second half of 2026.

Shares of Rimbunan Sawit closed unchanged at 18 sen, valuing the company at approximately RM367.5 million. The stock has declined more than 18% over the past 12 months, reflecting ongoing operational and earnings challenges.