Under the listing exercise, Matang is issuing 130 million new shares of 10 sen each made available to the Malaysian public at the offer price of 13 sen per share.
Based on the enlarged issued and paid-up share capital of 1.81 billion shares and the IPO price or 13 sen per share, its market capitalisation would be about RM235.30mil upon listing. Matang’s listing is tentatively scheduled for Jan 17, 2017.
Speaking at the launch of the prospectus on Monday morning, Matang chairman Datuk Teh Kean Ming said he is optimistic about the company’s prospects due to the positive outlook for the plantation industry.
“Matang expects to see some of its oil palms which were replanted over the past a few years ago to start yielding optimal level of FFB production in the near future.
“Coupled with the current crude palm oil (CPO) at over RM2,900 per tonne and industry expectations of the average CPO price of above RM2,700 next year, the board believes there is potential for growth prospects for Matang,” he added.
Of the RM16.90mil to be raised from the listing exercise, RM11.92mil or 70.5% would be used mainly for general working capital to finance Matang and its subsidiaries’ day-to-day operations over the next five years.
Also RM2.55mil or 15.1% would be used for capital expenditure to boost its operations of Matang estate, RM250,000 (1.5%) for replanting to improve the oil palm trees age profile and the remaining RM2.18mil (12.9%) would be to defray the listing expenses for the IPO.
Teh said out of the proceeds of RM11.92mil for day-to-day operational expenses, about RM9mil would be used over the next five years for purchase of fertilisers to ensure Matang’s oil palms yield an optimal level of fresh fruit bunches (FFB).
He added the replanting expenditure for Matang over the next two years would cover the purchase of the high quality “Felda Yangambi” line of germinated seeds, purchase of topsoil for the palm seedlings, land clearing expenses and costs associated with the preparation of the palm groves where the seedlings are to be planted.
Matang uses the “Felda Yangambi” line of germinated seeds as it has historically generated higher FFB yield and is also preferred by palm oil mills for the ability to produce FFBs with higher oil extraction rate.
Teh also said the palm oil industry and its plantation segment have the full support of the Malaysian Government, which has singled out palm oil as one of the main sectors to help Malaysia achieve developed nation status by 2020.
Matang’s oil palm trees are generally replanted when they are above 24 years old and are low yielding and for that, Matang has targeted to replant 16.4 hectares of its plantation area in 2017 as it seeks to improve the age profile of its oil palm trees.
It will take about four years before its replanted oil palm trees mature and start producing FFBs.
This reflects the group’s commitment to maintaining a low average age profile of its oil palms to ensure majority of the oil palms are within peak production ages of between five and 20 years.
As at 30 June 2016, only 16.4 hectares, or about 1.5% of Matang’s total oil palm plantation area, is with oil palm trees which had reached 21 years and above, i.e., past its peak production age and thus producing less FFB.
M&A Securities Sdn Bhd is the adviser, sponsor and underwriter for the IPO exercise.
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