TSH Resources Berhad Announces Major Related Party Acquisitions to Expand Indonesian Oil Palm Land Bank

Key Highlights of the Announcement

• Acquisition of 99.99996% of PT DAS by PT SPMN (TSH Indirect Subsidiary) for IDR5,499,997,800 (approx. RM1.276 million).
• Acquisition of Remaining 0.00004% Equity in PT DAS by PT MJC for IDR2,200 (approx. RM1).
• Proposed Acquisition of 100% of Konsep Majureka Sdn Bhd (KMSB) by TSH for RM35,034,135, comprising RM22,000,000 for shares and RM13,034,135 in assumed liabilities.
• All transactions are classified as Related Party Transactions (RPTs) under Bursa Malaysia’s Main Market Listing Requirements due to the involvement of major shareholders and directors.

Detailed Breakdown of the Proposed Transactions

1. PT DAS Acquisition

• Background and Structure:
  • PT DAS is an Indonesian oil palm plantation company with 2,500,000 shares (IDR1,000 each).
  • Bambang Suparno and Agus Mahdar are the current shareholders, acting on behalf of Vendor 1 and Vendor 2 (major shareholders of TSH).
  • PT DAS controls 787 ha of plantable oil palm land in Central Kalimantan, Indonesia.
  • Recent financials show net losses for FY2024 (IDR392,957) and FY2025 (IDR188,334), with net assets of IDR2,106,993 as of FY2025.
• Purchase Consideration:
  • Total consideration: IDR5,499,997,800 (approx. RM1.276 million).
  • 10% deposit to be paid immediately, with balance due within 90 days of completion.
  • To be funded entirely by internally generated funds.
• Valuation:
  • Land valued at IDR7,901,000,000 (approx. RM1.88 million for 1,140 ha) by KJPP Herman Meirizki and Rekan (Jan 2026 report).
• Completion:
  • Expected by 2H 2026, subject to due diligence and regulatory approvals.

2. KMSB Acquisition (Including PT KMS)

• Background and Structure:
  • KMSB is an investment holding company in Malaysia, holding 90% of PT KMS (an Indonesian oil palm plantation company).
  • PT KMS owns 9,842 ha of land (3,512 ha plantable in Phase I), with ongoing process to secure HGU (land use rights) for 5,964 ha.
  • FY2025 losses for PT KMS: IDR3,665,270; net assets: IDR793,636. KMSB consolidated net liabilities: RM3.19 million (FY2025).
  • Major shareholders and directors of KMSB are Vendor 1 and Vendor 2 (also major shareholders of TSH).
• Purchase Consideration:
  • Total consideration: RM35,034,135 (RM22,000,000 for shares + RM13,034,135 in liabilities to be assumed).
  • 10% deposit (RM2,200,000) upon execution; liabilities to be settled directly within seven days of completion; remaining balance (RM19,800,000) within 90 days post-completion.
• Valuation:
  • Land valued at IDR174,402,000,000 (approx. RM41.5 million for 9,842 ha) by KJPP Herman Meirizki and Rekan (Jan 2026 report).
• Completion:
  • Expected by 2H 2026, subject to due diligence, regulatory and other approvals.
  • Acquisition to be funded by internally generated funds.

3. Strategic Rationale and Potential Impact

• Economies of Scale: The PT DAS land is close (~40km) to TSH’s existing mill, supporting operational synergies and cost savings by integrating new estates into existing management and processing infrastructure.
• Expansion of Land Bank: PT KMS land (9,842 ha, with 3,512 ha plantable initially) is strategically located near TSH’s other estates, increasing the total plantable area in the region to ~6,000 ha (excluding plasma areas).
• Future Processing Facility: The KMSB acquisition supports the eventual establishment of an on-site mill, potentially reducing haulage costs (currently >160 km to nearest mill) and boosting margins.
• Growth in Indonesian Plantation Assets: Both acquisitions will substantially increase TSH’s Indonesian oil palm plantation area, enhancing its long-term growth prospects.

4. Related Party Transactions and Shareholder Interests

• Vendors are Major Shareholders: Vendor 1 (Chairman, 28.46% of TSH shares) and Vendor 2 (3.37% shareholding, connected to Vendor 1) are the vendors in both transactions. Both are also directors/shareholders of the target companies.
• Abstention from Deliberations: Vendor 1 has abstained from all Board and Audit Committee deliberations on these deals.
• No Other Transactions with Vendors in Past 12 Months: These are the only related party transactions involving Vendor 1 and Vendor 2 in the past year.
• Audit Committee Statement: The Audit Committee deems the deals in the best interests of TSH, on fair and reasonable terms, and not detrimental to minority shareholders.

5. Financial Effects

• No Share Capital Dilution: Considerations are fully cash-settled, with no new shares issued.
• Net Assets & Gearing: No immediate material impact on net assets or gearing as funding is from internal resources.
• Short-Term Earnings Impact: Not expected to materially affect earnings for FY2026 due to pre-development losses, but anticipated to enhance future group earnings upon estate maturity and mill construction.

6. Risks and Considerations for Investors

• Industry Risks: Transactions are subject to typical oil palm sector risks—regulatory approvals, commodity price volatility, weather, and changes in Indonesian export policies or land use rights.
• Execution Risks: Completions are conditional on successful due diligence, regulatory approvals, and no material adverse changes in the target companies before closing.
• Related Party Governance: As RPTs, these deals are under strict scrutiny to ensure fairness to minority shareholders.

Conclusion and Potential Share Price Impact

These acquisitions represent a significant step by TSH Resources Berhad to boost its land bank and production footprint in Indonesia, potentially unlocking substantial long-term value for shareholders through economies of scale, operational synergies, and future downstream integration. The deals are price sensitive, given the scale of the land acquisition, related party nature, and the strategic rationale to cement TSH’s position in the region’s plantation sector. Investors should watch for completion milestones, plantation development progress, and future mill construction updates that could drive share price re-rating.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors are advised to review the official filings, consult with their financial advisors, and consider all relevant risks before making any investment decisions regarding TSH Resources Berhad.

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