PETALING JAYA: Ecoscience International Bhd is confident the expansion of downstream activities by Indonesian oil palm companies will underpin its plan to expand its operations there.
The integrated palm oil services provider’s executive director Pan Kum Wan said the proceeds raised from its listing on the ACE Market of Bursa Malaysia would be used for the expansion of the company’s production capacity, specifically in Indonesia.
“About 40 years ago, there was a big expansion downstream in the Malaysian palm oil industry, with regards to refinery, biodiesel etc.
“Our view is that Indonesia will also be following in Malaysia’s footsteps to refine crude palm oil instead of exporting it,” said Pan after the company’s listing yesterday.
He added Indonesia’s attractive labour resources and more advanced biodiesel industry also formed the rationale for Ecoscience’s expansion plans there.
“They (Indonesia) are very fast in terms of their biodiesel production which is at B40 currently while Malaysia is still at B20.
“We want to set up our facilities there so that we are nearer to the market to capitalise on it. The labour costs in Indonesia is also an advantage to us.
“Based on our experience, Indonesia has good and skillful workers. By building our facilities there, we can employ workers there,” said Pan.
The expansion plans are expected to quicken the response time to requests from customers as well as boosts the group’s competitiveness in tendering for projects there.
Ecoscience’s managing director Wong Choi Ong said palm oil is a crucial commodity and staple worldwide.
Hence, the need for new palm oil mills and refineries will continue to be there not to mention the need to upgrade and replace older facilities.
“With that in mind, we want to continue to better ourselves in the global arena, starting with the establishment of an office and two fabrication facilities in Indonesia.
“We believe as the largest producer of palm oil in the world, Indonesia will provide us with an excellent platform to take Ecoscience to greater heights,” said Wong in a statement in conjunction with the company’s listing.
Ecoscience raised RM24.7mil from the public issue of 82.2 million new shares. The company made a soft debut on the ACE Market yesterday, opening at 29 sen per share or one sen lower than its initial public offering price of 30 sen per share.
The stock closed its maiden trading day four sen lower at 26 sen a share.
Other than enlarging its production line, Ecoscience’s business development director, Thing Jin Suan, said some of the proceeds will also be used to finance the group’s environmental and energy efficiency business segment.
“We would like to generate recurring income from this business by having a recurring income model through a leasing programme to our clients.
“Our technology is utilised in various industries. On top of the palm oil sector, we also applied this technology in commercial sectors like hotels, shopping malls and offices.
“We also found its use in manufacturing processing plants, like in the food and beverage, and semiconductor industries,” said Thing.
Despite headwinds like the fluctuating prices of crude palm oil (CPO) and the recent Covid-19 pandemic, the group continued to report growth.
“Our business is not directly correlated to the changes in CPO prices even though we are in the palm oil industry.
“We have been sustaining growth regardless of the highs and lows of CPO prices. During the pandemic, we still managed to generate RM153.2mil in revenue,” said Thing.
The pandemic, however, had lowered Ecoscience’s profit after tax due to higher costs and its inability to fully utilise its facilities as the group’s activities had to adhere to the country’s lockdown policy.