KUALA LUMPUR: Upstream oil palm plantation company Johor Plantations Group Bhd made a flat debut on Bursa Malaysia’s Main Market, opening at its initial public offering (IPO) price of 84 sen but it managed to close the day at 90 sen – a premium of six sen or 7.14%.
It was the most actively traded stock with 178 million shares changing hands.
The IPO, the country’s biggest in at least two years, raised RM735mil.
Managing director Mohd Faris Adli Shukery said the exercise was a “strategic” leap forward as the company moved towards becoming an integrated player within the plantation industry.
“With a focus on specialty oils and fats, this strategic move aims to unlock a wealth of growth opportunities,” he said after the company’s listing ceremony here yesterday.
He said of proceeds raised from the public issue, a total of RM196.8mil would be used to build an integrated sustainable palm oil complex as the company aimed to venture into downstream activities.
Mohd Faris said the company was targeting around 20% of its revenue to come from its downstream segment by 2027.
The remaining of the public issue proceeds would be used to pare down bank borrowings and to fund working capital and listing expenses.
Hong Leong Investment Bank (HLIB) Research has initiated coverage on the company with a “buy” recommendation and a target price of 99 sen based on 13.5 times its financial year 2025 (FY25) core earnings per share of 7.3 sen.
“At its IPO price of 84 sen, the company is valued at FY24-26 price-to-earnings ratio of 9.8 times, 11.4 times, and 11.7 times, respectively.”
The research house also said it was projecting the group’s core net profit to expand by 27.7% to RM213.8mil in FY24, supported by fresh fruit bunch (FFB) output growth, lower production cost and marginally higher crude palm oil (CPO) price assumption.
“We project FY25 core net profit to decline by 14.1% to RM183.6mil as we expect marginal FFB output growth and production cost decline will be outweighed by lower CPO price assumption of RM3,800 per tonne, versus average CPO price assumption of RM4,000 per tonne for FY24.”
Operating primarily in Johor, the company manages some 23 plantation estates.
It has 22 plantation estates in Johor and a plantation estate in Pahang, with a total land bank of 59,781ha and a total oil palm planted area of 55,904ha, which is about 93.5% of the total land area of the group’s plantation estates.
The plantation group also has under its wing five palm oil mills to process FFB in order to produce crude palm oil and palm kernel.
Besides these, Johor Plantations is also involved in supporting services, such as trading of agricultural machinery and parts, and has also ventured into the renewable energy business as a renewable energy producer and biomass distributor.
In its note to clients, HLIB Research said the company had a “proven and long-standing commitment” to sustainable palm oil production.
“It has been maintaining its operations at the Roundtable on Sustainable Palm Oil (RSPO)-certified standards, with all its palm oil mills and accompanying plantation estates are RSPO-certified,” said the reseach house.
