Main Market-bound MKH Oil Palm’s IPO oversubscribed by 8.43 times
19/04/2024 (The Edge Malaysia), Kuala Lumpur - MKH Oil Palm (East Kalimantan) Bhd’s initial public offering (IPO) has been oversubscribed by 8.43 times, ahead of its listing on the Bursa Malaysia Main Market on April 30.
The 51.2 million IPO shares made available for the Malaysian public received a total of 9,510 applications for 482.88 million issue shares, valued at RM299.39 million, according to its statement on Friday.
For the Bumiputera portion, a total of 4,628 applications for 220.24 million shares were received, which represents an oversubscription rate of 7.6 times. For the public portion, a total of 4,882 applications for 262.64 million shares were received, which represents an oversubscription rate of 9.26 times.
Meanwhile, the joint placement agents have confirmed that the 168.79 million issue shares and 30.7 million offer shares made available by way of private placement to selected investors have been fully placed out.
The notices of allotment will be posted to all successful applicants on April 26.
MKH Oil Palm, the plantation arm of property developer MKH Bhd, aims to raise up to RM155.43 million from its Main Market IPO. Based on the IPO price of 62 sen apiece, the group will have a market capitalisation of RM634.6 million.
According to MKH Oil Palm non-independent non-executive chairman Tan Sri Chen Kooi Chiew@Cheng Ngi Chong, the group is well-equipped to pursue its expansion strategy, which includes acquiring new land in the vicinity of the group’s existing plantation estates to expand its plantation landbank.
“Furthermore, our efforts will be directed towards enhancing our operational efficiency and increasing our processing capabilities and product offerings, supported by investments in new machinery and equipment. A key initiative includes the new palm kernel (PK) crushing facility to crush and press PK for extraction and processing into crude palm kernel oil and palm kernel expeller, thereby diversifying our revenue streams,” he added.
MKH Oil Palm is an upstream oil palm plantation group with operations based in East Kalimantan, Indonesia. Through its subsidiaries, the group is principally involved in the cultivation of oil palm and production and sale of crude palm oil and PK.
The group owns two oil palm plantation estates with a total land area of 18,205.3 hectares, one palm oil mill and one jetty.
For the financial year ended Sept 30, 2023 (FY2023), the company’s net profit dropped 45% to RM30.4 million, from RM55.5 million previously (FY2022), due to rising operating costs amid an increase in operational activities, driven by more favourable weather conditions.
FY2023 revenue rose 7% to RM337.98 million, from RM315.82 million in FY2022, contributed 100% by sales derived in Indonesia.
M&A Securities Sdn Bhd is the adviser, managing underwriter, joint underwriter and joint placement agent for the IPO exercise. Kenanga Investment Bank Bhd is the joint underwriter and joint placement agent, while AmInvestment Bank Bhd is the joint placement agent for the IPO.