PETALING JAYA: Upstream oil palm plantation company MKH Oil Palm (East Kalimantan) Bhd (MKHOP) says it is currently in the midst of conducting negotiations and due diligence to acquire new plantation land as part of its expansion plans.
Chairman Tan Sri Alex Chen Kooi Chiew said the company, which was listed on the Main Market of Bursa Malaysia in April, currently has 100% of its oil palm trees at production age.
“For our current landbank, out of the 18,205 ha that we have, more than 17,000 ha has been used for planting while the remaining has been used for crude palm oil (CPO) mills, offices, staff quarters, roads and others,” he said in an interview with StarBiz.
Chen said the company was now negotiating with some Indonesian land owners to potentially buy land in East Kalimantan, near its current landbank and will make the necessary announcements on this, in due course.
Should any acquisition take place, the company will be utilising internally generated funds as well as proceeds from its initial public offering exercise to fund it.
“We are committed to expansion,” Chen said.
The company, which is a wholly-owned unit of property developer MKH Bhd
most recently reported a net profit of RM21mil or 2.73 sen earnings per share on the back of a revenue of RM90.6mil for its fourth quarter ended Sept 30.
It also declared a second interim single-tier dividend of two sen per share to be paid on Dec 30.
Chen, a seasoned businessman, said the two main determinants of a plantation business were mainly CPO price and cost.
“Operating in Malaysia and Indonesia is different. Indonesia is generally more costly but we are bucking the trend.”
He said the company has a 50% dividend policy, where it will pay out at least 50% of its net profits as dividends to its shareholders annually.
He said the outlook for the financial year ending Sept 30, 2025 remained well supported by strong demand for CPO, which is currently trading at around RM4,300 per tonne in Indonesia.
At last look, the company’s stock was trading at 70 sen apiece, giving it a market capitalisaition of over RM720mil.
At this price, it is also 13% above its initial public offering price of 62 sen.
MKHOP has been operating its oil palm plantation in East Kalimantan for more than 15 years.
Chen said the new relocation of Indonesia’s capital city to Nusantara in East Kalimantan poses many future business prospects and opportunities for the company.
