Johor Plantations rises 10% in biggest Malaysian debut in 2 years

Johor Plantations Group debuted Tuesday on Malaysia’s main stock exchange, rising over 10% from the initial public offering price of 0.84 ringgit per share.

The first quotation for the company’s shares at Bursa Malaysia was flat at 0.84. The price then started rising, and went up 10.7% to 0.93 at one point.

Through the IPO launched in June, the company raised 735 million ringgit ($156 million) by selling a 35% stake, or 835 million shares, making it the largest IPO since March 2022, when dairy producer Farm Fresh raised 1 billion ringgit.

JPG engages in the production of palm oil, palm kernels and bio-methane. With the raised funds, it aims to become an integrated player in the palm oil industry, producing specialty oils and fats, said Chairman Ismail Bakar at the listing ceremony held at Bursa Malaysia in Kuala Lumpur.

“With the favorable outlook following the upward trend in global demand for vegetable oils, as well as the industry’s shift towards sustainably sourced crude palm oil, we believe we are strategically positioned to address the increasing demand for sustainably produced specialty oils and fats and to leverage on the opportunities ahead to grow our market share,” said Ismail.

According to the prospectus, half of the total to be raised from the public issue, or about 170 million ringgit, has been earmarked to construct an integrated sustainable palm oil complex and replanting activities.

Johor Plantations Group is linked to the government of Johor, the southernmost state in Peninsular Malaysia. It is a subsidiary of Kulim Berhad, which is owned by the state government’s investment arm, Johor Corp., which is involved in various sectors, including plantations, health care, food and restaurants, and logistics.

As of May, the group had a total of 55,904 hectares of land on 23 oil palm estates, including 22 in Johor and one in Pahang state. All of JPG’s estates and mills are fully certified under the international RSPO certification program for sustainable palm oil.

“We are poised to strengthen our position in the palm oil industry through sustainable practices and innovative ventures,” said JPG Managing Director Mohd Faris Adli Shukery, adding that the market listing marks the next milestone in the group’s evolution.

Of the raised funds, approximately 389.8 million ringgit was raised through a public issue of 464 million new ordinary shares, and 345.2 million ringgit was raised via an offer for sale of 411 million existing shares at the IPO price.

In the IPO, the company’s market capitalization was valued at 2.1 billion ringgit, with issued share capital of 2.5 billion.

On June 28, the group announced that the IPO’s public portion of 50 million shares was oversubscribed by 2.18 times — there were 9,555 applications for a total of 159.01 million shares.

For the fiscal year ending in 2023, JPG recorded revenue of 1.25 billion ringgit, down 28.4% from 1.75 billion the previous year. This decline was primarily due to lower prices and volumes for crude palm oil and palm kernels. Consequently, gross profit fell 52.8% to 363.1 million ringgit, with the gross profit margin shrinking to 29% from 44%.

Despite these setbacks, the group announced promising first-quarter financial results, with an increase of revenue by 17% year-on-year to 294.9 million ringgit from 252.0 million. Profit after tax also rose, by 111.4% to 49.5 million ringgit.

Tags: price, Production, Malaysia, palm oil, Johor Plantations Group, stock exchange, IPO, shares