KUALA LUMPUR: MKH Oil Palm (East Kalimantan) Bhd (MOP) plans to expand its plantation in East Kalimantan after listing on the main market of Bursa Malaysia.
The oil palm plantation player is raising RM136.4 million from its initial public offering (IPO) and allocating RM42.0 million, or 30.8 per cent of the proceeds, for the land acquisition.
The additional land is close to the company’s current oil palm plantation estates in Kutai Kartanegara, East Kalimantan.
According to the company’s prospectus, which was launched on Friday, MOP has identified companies) with potential land banks for oil palm plantation in the sub-district of Muara Kaman, Kutai Kartanegara, East Kalimantan, with an estimated land area of approximately 5,000.0ha with an estimated area for planting of 4,000.0 to 4,500.0ha.
Non-independent non-executive chairman Tan Sri Datuk Chen Kooi Chiew said the IPO proceeds will accelerate growth plans, which include expanding the company’s plantation landbank by acquiring lands located near existing estates to leverage existing processing and jetty facilities.
“We will also invest in new machinery and equipment to enhance operational efficiency, increase processing capabilities, and broaden our product offerings,” he said in a statement.
Apart from the allocation for the land acquisition, MOP plans to use RM9.0 million, or 6.6 per cent, to set up a palm kernel (PK) crushing facility to generate an additional income stream.
RM42.0 million, or 30.8 per cent of the amount raised, will be used for capital expenditures on existing plantation lands, refurbishment and upkeep of the existing palm oil mill, refurbishment and construction of workers and staff housing quarters, and expansion of the electricity supply.
Further, RM30.0 million, or 22.0 per cent, of the IPO proceeds will go towards loan repayment, and RM13.4 million, or 9.8 per cent, will be deployed as working capital and listing expenses.
According to the prospectus, MOP has oil palm plantations with a maturity and topographical profile that result in high fresh fruit brunche (FFB) yields.
As of the latest practicable date (LPD), MOP prime mature oil palms are between 10 and 16 years old, making up approximately 94.9 per cent of the company’s total planted area.
As a result of the ideal age profile of MOP’s oil palms, whereby the majority of them are in the early or midyears of the prime mature stage, as well as the topographical profile of its plantation estates, MOP achieved average FFB yields of 29.3mt per ha, 26.7mt per ha, 23.2mt per ha and 24.1mt per ha for FY20 to FY23, respectively.
MPO’s IPO exercise comprises a public issue of 220.0 million shares, or 21.5 per cent of share capital, and a private placement of 30.7 million shares, or 3.0 per cent of the enlarged shares, to selected investors.
Of the 220.00 million shares, 51.21 million will be made available for application to the Malaysian public via balloting, while the remaining 168.79 million new shares are reserved for private placement to selected investors.
With an enlarged issued share capital of 1.02 billion shares and an IPO price of RM0.62 per share, MOP will have a market capitalisation of RM634.6 million upon listing.
In terms of dividend policy, MOP intends to recommend and distribute a dividend of at least 50 per cent of its annual net profit.
The company is targeted to be listed on the main market of Bursa Malaysia on April 30, 2024.
