LAND & General Bhd (L&G) may develop its oil palm and rubber estate in Sungai Jernih, Selangor, into a bustling township in the longer-term.
L&G currently owns 1,010ha of plantation land cultivating oil palm and rubber. According to its annual report for 2012, the plantation land has a net book value of RM48.14 million.
Managing director Low Gay Teck said L&G is not exiting the plantation business, but merely looking for development potential in under-served areas.
"Sungai Jernih is not a mature area. It would probably take another five to 10 years before we see potential there. Rawang, which is nearby, is a mature housing area and we expect Sungai Jernih to follow suit.
"If we decide to develop the estate, it is probably because we have bought plantation land elsewhere. There is nothing on the table yet," Low told Business Times.
The estate is located north of Selangor, about 20 minutes from Proton City in Tanjung Malim. It is bordered by the new North-South Expressway to the west.
Low said L&G will continue cultivating oil palm and rubber for additional income, while focusing on its core business, which is property development.
He said the plantation business contributes an average three per cent a year to the company's net profit and revenue.
For fiscal year 2012, L&G posted a net profit of RM57.2 million on revenue of RM216.3 million.
Close to 90 per cent of the net profit and revenue was derived from its property development activities, with a small fraction from its investment assets.
L&G also owns Sri Damansara Club and Sekolah Sri Bestari. This segment contributes around seven per cent to its earnings.
Low said property development is still a sustainable business in Malaysia, adding that there is an oversupply but only in hotspots where many developers are focusing their resources.