MKHOP makes market debut with 1.6% premium

From left: Kenanga Investment Bank Bhd head of corporate and institutional coverage Leong Yew Loong, MKH Oil Palm (East Kalimantan) Bhd (MKHOP) independent non-executive director Dr. Hasuria Binti Che Omar, M & A Securities Sdn Bhd managing director Datuk Bill Tan, MKHOP executive director Emily Chen, MKHOP non-executive director Tan Sri Datuk Eddy Chen, MKHOP chairman Datuk Alex Chen Kooi Chiew, MKHOP executive director Datuk Andy Lee Khee Meng, Embassy of the Republic of Indonesia deputy chief of mission, Ibu Rossy Verona, MKHOP non-independent non-executive director Yeo Kiat Seng, AmInvestment Bank Bhd deputy chief executive officer Christopher Ng Kok Wai.

KUALA LUMPUR: MKH Oil Palm (East Kalimantan) Bhd (MKHOP) made a flattish debut on the Main Market, opening at 63 sen per share or 1.6% over its initial public offering (IPO) price of 62 sen.

The share price of the palm oil producer closed at 61.5 sen with an intra-day high of 65.5 sen. It was also the most active stock with 122 million shares changing hands.

MKHOP executive director Datuk Andy Lee Khee Meng shared that the group’s growth will be focused on three key areas, namely, the expansion of its plantation estates, enhancing operational efficiency and growing its capabilities and offerings.

He said the group is expecting to finalise its acquisition of an estimated land area of approximately 5,000 ha by the second quarter of 2024.

Regarding operational efficiency, the group has plans to purchase additional machinery and equipment to enhance efficiency of its fresh fruit bunch harvesting and palm oil milling activities.

“With new machinery and equipment, our oil extraction rate (OER) of crude palm oil (CPO) is expected to improve, which will contribute to improved financial performance.”

On its offering expansion, Lee shared the group is planning to set up a palm kernel (PK) crushing facility with a processing capacity of 90 tonnes of PK per day, slated to commence operations by the second quarter of this year.

“The facility will be used to crush and press PK for extraction and processing into crude palm kernel oil along with palm kernel expeller as a by-product for sales, which will contribute additional revenue channels for MKHOP,” he said.

The group has an optimistic outlook despite extreme weather conditions and global tensions.

Lee said “since our plantations are situated right on the equator, climate changes will not be as severe as plantations located away from it”.

Prior to El Nino, the group had already installed an integrated drainage system in its plantation estates to ensure water is distributed during dry weather spells.

“Pumps, stoppers and water gates are installed to maintain the optimised moisture level of our soil,” Lee added.

MKHOP chairman Tan Sri Alex Chen Kooi Chiew said the ongoing dry El Nino weather will lead to tighter global CPO supply, which is expected to support CPO prices.

“This presents a favourable outlook for us, as we focus on improving production efficiency to enhance OER to capitalise on higher CPO prices,” he said.

With the ongoing global geopolitical tensions, Lee said CPO prices are expected to increase from global unrest.

MKHOP remains confident in the long-term growth prospects of the oil palm industry, driven by the upward trajectory of the global population and escalating demand for edible oils worldwide.

Commenting on the global edible oil competition, Lee shared that corn and soybean oil production from North and South America produces inconsistent yields due to volatile weather conditions in the region.

He added that the inconsistent yields from those regions do not pose a sizeable threat to the palm oil industry.Meanwhile, Chen added that the equatorial climate is stable and contributes to consistent CPO production yield.

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