Johor Plantations rises 8.33% in Main Market debut

KUALA LUMPUR: Shares in Johor Plantations Group Bhd rose 8.33% as it made its debut on the Main Market of Bursa Malaysia after an intial public offering (IPO) that raised RM735mil.

Trading commenced with no change to the share price, but the trading stock of the upstream oil palm plantations group picked up eight sen to 91 sen a share as at 9.22am, after 58.75 million shares changed hands.

Johor Plantations is the largest IPO on Bursa Malaysia so far this year with about RM389.8mil raised via the public issue of 464 million new shares and about RM345.2mil raise via an offer for sale of 411 million existing shares.

About 50.5% of the total proceeds from the public issue have been earmarked for the construction of an integrated sustainable palm oil complex and replanting activities.

Meanwhile, 43% will be channelled towards the repayment of bank borrowings and 1.7% will be for working capital.

The remaining proceeds will be used for listing related expenses.

Based on the enlarged issued share capital of 2.5 billion shares and IPO price of 84 sen per share, the company's market capitalisation was RM2.1bil upon listing.

For the financial year ended Dec 31, 2023 (FY23), Johor Plantations posted a net profit of RM165.73mil on revenue of RM1.25bil, which compared to net profit of RM495.36mil and revenue of RM1.75bil in FY22.

For the first quarter of 2024, Johor Plantations posted a net profit of RM49.97mil, which was more than double the net profit of RM23.4mil in the previous corresponding quarter.

The group's revenue rose to RM294.91mil during the quarter as compared to RM251.98mil in the comparative quarter.

Hong Leong Investment Bank (HLIB) Research initiated coverage on the stock with a "buy" rating and target price of 99 sen a share.

In a note, it said the group's core net profit is projected to expand 27.7% to RM213.8mil in FY24, supported by fresh fruit bunch (FFB) growth, lower production cost and marginally crude palm oil (CPO) price assumption.

It, however, expects a 14.1% decline in FY25 core net profit to RM183.6mil as FFB output growth is expected to be marginal while production cost decline will be outweighed by a lower CPO price assumption.