Kuala Lumpur, 29 March 2024 – Oil palm plantation player, MKH Oil Palm (East Kalimantan) Berhad (“MKHOP” or the “Group”) has successfully launched its prospectus in conjunction with its upcoming initial public offering (“IPO”) on the Main Market of Bursa Malaysia Securities Berhad (“Bursa Securities”).

MKHOP, an upstream oil palm plantation group, is principally engaged in the cultivation of oil palm and production and sale of crude palm oil (“CPO”) and palm kernel (“PK”). The Group operates two oil palm plantations totalling 18,205.3 hectares (“Ha”) in East Kalimantan, Indonesia, supported by an on-site palm oil mill and jetty. The plantations are Indonesian Sustainable Palm Oil (“ISPO”) certified, reflecting the Group’s sustainable plantation practices.

The majority of its oil palms trees are in prime mature stage or peak production years, between the ages of 10 to 16 years. Ideally situated along the equator, the plantations thrive with ample levels of rainfall and sunshine that create optimal growing condition. The mostly flat terrain facilitates efficient operations including planting, upkeep and maintenance as well as harvesting and collection of fresh fruit bunches (“FFB”). Strategically located in East Kalimantan’s Samarinda (the provincial capital), Balikpapan (the financial centre), and Indonesia’s new capital, Nusantara, these plantation estates are expected to benefit from their prime geographical placement.

Non-Independent Non-Executive Chairman of MKHOP, Tan Sri Dato’ Chen Kooi Chiew @ Cheng Ngi Chong (丹斯里拿督曾贵秋) said, “Our prospectus launch marks another important milestone in our journey towards becoming a listed company on the Main Market of Bursa Securities. By tapping into the broader equity market, we are confident in enhancing the value of the Group through business expansion and optimisation of operations.”

“The IPO proceeds will accelerate our growth plans, which include expanding our plantation landbank by acquiring lands located near our existing estates to leverage on our 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 added.

The upcoming IPO exercise is set to raise RM136.4 million. RM42.0 million or 30.8% of the IPO proceeds will be used to acquire lands for oil palm plantation within the East Kalimantan province while RM9.0 million or 6.6% will be allocated for the setting up of a PK crushing facility to provide the Group with an additional income stream. Capital expenditure for existing plantations lands; refurbishment and/or upkeep of existing palm oil mill; refurbishment and construction of workers/staff housing quarters; and expansion of electricity supply will use up RM42.0 million or 30.8% of the amount raised.

RM30.0 million or 22.0% of the IPO proceeds will go towards repayment of loan due to a related party. The rest, totalling RM13.4 million or 9.8%, will be deployed as working capital and listing expenses.

Managing Director of M & A Securities Sdn Bhd, Datuk Bill Tan (拿督陈俊㟽) said, “The upcoming IPO will equip MKHOP with the resources to further enhance and optimise its operations while capitalising on Indonesia's position as the world's leading CPO consumer market. With the Group’s deep industry experience and proven leadership, I am confident that MKHOP will continue to establish itself as a prominent player among its Indonesian peers.”

According to the Independent Market Research Report by Smith Zander International Sdn Bhd, Indonesia is the world’s largest consumer market for CPO. In 2023, CPO consumption in Indonesia amounted to 19.7 million metric tonne (“MT”) or 25.5% of global CPO consumption of 77.4 million MT. This is followed by India (12.1%), European Union (7.75%) and China (7.69%). From 2020 to 2023, consumption of CPO in Indonesia increased from 16.7 million MT to 19.7 million MT at a compounded annual growth rate of (“CAGR”) of 5.7%.

MKHOP reported revenue of RM338.0 million for the financial year ended 30 September 2023 (“FYE2023”), reflecting a 7.0% year-on-year (“YoY”) increase from the previous corresponding financial year’s (“FYE2022”) RM315.8 million on the back of higher production. FYE2023’s profit after tax and minority interest (“net profit”) stood lower at RM30.4 million from RM55.5 million in FYE2022 due to rising operating costs associated with increased operational activities driven by more favourable weather conditions in FYE2023.

The Group’s IPO exercise comprises a public issue of 220.0 million new ordinary shares in MKHOP (“Shares”), or 21.5% of its enlarged share capital, and an offer for sale of 30.7 million existing Shares, or 3.0% of the enlarged shares by way of private placement to selected investors.

Out of the 220.00 million new Shares, 51.21 million new Shares will be made available for application by 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, MKHOP will have a market capitalisation of RM634.6 million upon listing.

In terms of dividend policy, the Group intends to recommend and distribute a dividend of at least 50% of its annual net profit.

Following the prospectus launch, applications for the public issue are open from today and will be closed on 16 April 2024 at 5:00 pm. The Group is targeted to be listed on the Main Market of Bursa Securities on 30 April 2024.

From left: MKHOP independent non-executive director Yahya Ariffin, executive director Emily Chen Wei Chyong, executive director Datuk Andy Lee Khee Meng, non-executive director Tan Sri Eddy Chen, chairman Tan Sri Alex Chen, M&A Securities Sdn Bhd managing director Datuk Bill Tan, Kenanga Investment Bank Bhd head of group investment banking Datuk Roslan Hj Tik and AmInvestment Bank Bhd head of ECM Syndication Freddy Kong

About MKH Oil Palm (East Kalimantan) Berhad

MKH Oil Palm (East Kalimantan) Berhad (“MKHOP” or the “Group”) is an upstream oil palm plantation group with operations based in East Kalimantan, Indonesia. Through its subsidiaries, MKHOP is principally involved in the cultivation of oil palm and production and sale of crude palm oil and palm kernel. The Group owns 2 oil palm plantation estates with total land area of 18,205.3 hectares, 1 palm oil mill and 1 jetty. Positioned along the equator, the plantations receive sufficient rainfall and sunshine, creating an optimal climate for oil palm cultivation. The plantation estates are strategically positioned in East Kalimantan’s, Samarinda (the provincial capital); Balikpapan (the financial centre) and Indonesia’s new capital, Nusantara.

For more information, please log on to https://mkhberhad.com/plantation.