PETALING JAYA: Main-market bound Johor Plantations Group Bhd (JPG) is expected to see strong earnings growth this year on higher palm oil prices and fresh fruit bunch production and lower production costs.
However, the net integrated plantation company’s net profit will likely decrease in the financial year ending Dec 31, 2025 (FY25) due to lower palm oil prices and lower production volume growth amid its aggressive replanting programme, according to TA Research.
The research house ascribed a fair value of RM1.06 for JPG’s shares based on 14 times the estimated price-earnings ratio (PER) for FY25, a 20% discount to its sector target PER of 18 times.
“We believe the discount is justifiable due to JPG’s considerable debt obligations and the substantial capital expenditure needed for its replanting programme,” the research house explained.
JPG is expected to be listed on July 9 with an initial public offering price of 84 sen per share to raise an estimated RM735mil.
Some 50.5% of the total proceeds to be raised from the public issue has been earmarked for the construction of an integrated sustainable palm oil complex and replanting, 43% will be channelled towards the repayment of bank borrowings, 1.7% will be for working capital, and the remainder for listing expenses.
TA Research estimated a net profit of RM204.6mil, up 24.6% year-on-year, for JPG for FY24.
The company’s earnings, however, are expected to slide to RM189.3mil in the following year.
