TH Plantations’ move into renewable energy draws investors’ interest

TH Plantations Bhd is on the rise. TH Plantations, which is the plantation arm of Lembaga Tabung Haji, closed at 66.5 sen on June 21.

Technical indicators look positive, with expectations that it will move towards its resistance at 88.5 sen. This may look like a long way to go but the counter has surged from a low of 48 sen to a high of 88 sen. The counter closed at 64 sen on June 24, signifying a 31% jump year-to-date.

What’s interesting about TH Plantations is it is teaming up with UEM Lestra Bhd, a wholly owned unit of UEM Group, to develop a 1.2 megawatt (MW) biogas power plant in Kluang, Johor. The biogas power plant — which is set to begin operations in 2026 — will generate enough electricity to power up to 1,500 homes annually.

The plant is also expected to prevent 20,000 tonnes of carbon emissions each year, which is equivalent to 4,760 cars driven in a year. The company said renewable energy is poised to play an increasingly significant role in Malaysia's electricity generation, given the abundance of biomass and biogas resources.

Main Market-listed TH Plantations is currently engaged in the business of oil palm, rubber and teak plantations. It has more than 97,000 hectares covering 38 estates and six mills in Peninsular Malaysia, Sabah and Sarawak as well as Kalimantan in Indonesia.

TH Plantations posted a 13.6% year-on-year increase in net profit to RM13 million for the first quarter ended March 31, 2024, driven by higher operating profit. Revenue rose 7.5% to RM157.3 million, primarily due to higher sales volumes of crude palm oil and fresh fruit bunches.

Going into renewable energy may be just the tonic the company needs. Large-scale solar ventures (LSS) will allow palm oil producers to generate up to 54 times more operating profits per hectare compared to oil palm.

But not all planters can go into solar farming as only selected planters with the right estate location may benefit from this solar potential.

As it is, SD Guthrie has made public its renewable energy ambition with a one-gigawatt (GW) capacity target. Such moves helped planters gain immediate rental returns as opposed to the typical seven-year gestation period for oil palm to generate maiden profits after replanting.

It looks like exciting times for TH Plantions as it goes into this green sector while generating multiple times earnings.