Innoprise seeing new highs on elevated CPO prices

Innoprise Plantations Bhd surpassed its two-year high of RM1.72 on Nov 1. The counter is one of the beneficiaries of strong crude palm oil prices, which have been holding above RM3,500-RM4,000 per tonne for 3 months.

Innoprise like other plantation companies should be making higher profits given that their cost is around RM2,000 per tonne. Another plus point is the generous dividend payout.

The group, which is 50.22% owned by Yayasan Sabah Group, also operates a palm oil mill capable of processing 60–90 metric tonnes of FFB per hour. Innoprise may not own plantation assets but it has got its land rent-free from Sabah government. Another major shareholder is TSH Resources Bhd with 21.94%. Its group executive director Tan Aik Kiong is also Innoprise’s managing director.

Innoprise has a dividend policy of paying out at least 80% of its net profit.

For FY2023, it paid 9.5 sen dividends amounting to RM45.49 million or 86.83% of its net profit.

In terms of FFB production, Innoprise achieved an 11% increase in FY2023 to 271,493 tonnes from 245,189 tonnes in FY2022. CPO production grew to 54,467 tonnes in FY2023 from 48,196 tonnes in FY2022, while PK production rose to 9,430 tonnes from 8,126 tonnes.

Its FY2023 yield per mature hectare was 22.27 tonne/ha, up 8.8% from 20.46 tonne/ha in FY2022, due to higher hectarage being harvested and its oil palms’ improving maturity, Innoprise says in its 2023 annual report.

Given that 92.5% of its palms are in prime maturity stage of eight years and more, Innoprise says it won’t need to replant over the next seven to eight years. Global demand for palm oil remains resilient, particularly in key markets such as India, China and Pakistan.

In addition, palm oil prices are projected to rise, driven by forecasts indicating that global palm oil production growth in 2024 will be the slowest in four years.

With demand for palm oil products remaining strong and the current level of CPO and PK prices, Innoprise should be able to post a reasonable profit in the year ahead.