KUALA LUMPUR: Plantation firm Matang Bhd expects further growth and more improvement in the company’s oil palm yields.
The company will be listing on the Ace Market of Bursa Malaysia in mid-January.
“As part of a sustainable business, we want to plan ahead for replanting to improve the age profile of the oil palm trees. Ideally, for example, we would like to have 50% to 60% (of total trees) at their peak age, with a further 30% to 40% coming into their peak and then 5% to 10% (up) for replanting,” chairman Datuk Teh Kean Ming said at a press conference after the launch of the company’s share prospectus.
“With this, the future will be more sustainable and the earnings and yields will be a lot more consistent,” he said.
Matang has most of its trees in their peak age, with an expected maximum or most productive palm oil output or yield throughout the trees’ lifespan.
“We are now at 77% peak age, of which the trees are within five to 20 years old, while 20% of our trees are within the ages of one to four. Then, another 1.5% are up for replanting and they will join the young trees (group),” Teh said.
Matang’s oil palm trees are usually replanted when they are above 24 years old.
It will target to replant 16.4ha of plantation area next year as part of plans to improve the age profile of the oil palm trees.
“When these trees are past their prime age, they become very tall and the cost of housing is high and the yields will also see a drop,” Teh said.
It will take about four years before the replanted oil palm trees mature and start producing fresh fruit bunches (FFB).
Matang wants to maintain a low average age profile of its oil palm trees to ensure the majority of the oil palms are within the peak production ages of between five and 20 years.
“Coupled with the current crude palm oil (CPO) price at over RM2,900 per tonne, the board believes there is potential for growth prospects for Matang,” Teh said.
He said the present price of CPO at RM3,200 per tonne was considered “very lucrative” for palm oil companies.
Teh also said the company continues to be on the lookout for suitable land bank or even mergers and acquisitions.
“In the immediate future, we would like to focus on what we do best. If there is an opportunity that comes along some time in the future, then the board cannot discount this kind of possibility,” he said.
In its upcoming public listing, the company will raise RM16.9mil that will be used for the core business.
Of the total initial public offering (IPO) proceeds, RM11.92mil (or 70.5%) will be allocated for general working capital requirements to finance Matang’s operations over the next five years.
Another RM2.55mil (or 15.1%) will be allocated for capital expenditure to enhance the operational effectiveness of Matang’s estates, and RM250,000 (or 1.5%) will be used for a replanting exercise to improve the oil palm trees’ age profile of Matang Estate.
The remaining RM2.18mil (or 12.9%) will be used to defray listing expenses for the IPO.
The public listing will see Matang issuing 130 million new shares at a par value of 10 sen each with an issue price of 13 sen per share. Post-listing, the company will have a paid-up share capital of 1.81 billion shares and an anticipated market capitalisation of approximately RM235.30mil upon listing based on the IPO reference price of 13 sen per share.
MCA president and Transport Minister Datuk Seri Liow Tiong Lai said in his speech that Matang started out in the 1970s as a grouping of smallholders involved in the palm oil industry.
Liow said Matang Holdings Bhd (the unit of Matang Bhd) has 18,719 shareholders with 120 million shares, some of whom have been holding their shares since 1981.
“Matang certainly counts as one of the success stories of MCA. In fact, MCA has played an instrumental role in helping transform small, family-owned enterprises or partnerships into large corporations,” Liow said.
“MCA then established Multi-Purpose Holdings Bhd (now known as Magnum Bhd) in 1975 to raise capital from the Chinese community for investment purposes. Encouraged by this successful initiative, various MCA branches pooled their resources to form another four corporations between 1978 and 1981. Aik Hua Holdings Bhd was set up by the Selangor MCA, Panwa Development Bhd by the Pahang MCA, Peak Hua Holdings Bhd by the Perak MCA and Matang Holdings Bhd by the Johor MCA,” he added.
Meanwhile, Teh said of the RM11.92mil allocated for the day-to-day operational expenses, an estimated RM9mil will be incurred over the next five years for the purchase of fertilisers to upkeep and maintain the estate.
The company said this would ensure Matang’s oil palm trees are fertilised to an optimal level of FFB yield.
The replanting plans over the next two years will include the purchase of the high-quality Felda Yangambi line of germinated seeds, which have historically generated a higher FFB yield and are also usually preferred by palm oil mills for their ability to produce FFBs with a higher oil extraction rate.
Its prospectus said that 429.6ha or 39.7% of the plantation areas have flat terrain with a slope class of zero to two degrees, and 357.1ha or 33% on the undulating terrain with a slope class of two to six degrees.
The closing of the application for the IPO will be on Jan 3, 2017, while the allotment of IPO shares to successful applicants is on Jan 13, 2017 and the date of listing will be on Jan 17, 2017.