IPO Series – Upstream Oil Palm Plantation Company

1) Upstream plantation for the production of Crude Palm Oil (CPO) and Palm Kernel (PK)

2) Trading and support services – Dealer in agricultural machinery services, sales of palm nursery and other plantation products and services, and the provision of training and safety-related services, and supply of safety products.

3) Renewable energy – Production of biomethane
Location: Johor and Pahang (with 54348Ha land area in Johor and 1556Ha land area in Pahang)
Revenue stream: CPO (86%), PK(12.9%), and Others (1.1%)
Future business activities: Downstream processing – Refining into specialty oils and fats for food production

Source: The Independent

Utilization of Proceeds
-Capital expenditure (RM19.6829M or 50.5%)
-Repayment of bank borrowings (RM16.744M or 43.0%)
-Working capital (RM6.741M or 1.7%)
-Estimated listing expenses (RM18.750M or 4.8%)

Dividend Policy
The group plans to distribute a dividend of at least 50.0% of the annual audited PAT  

Financial Summary
-The group recorded the highest revenue of RM1751.645M or RM1.75B in FY2022 as compared from FY2020 to FY2023, contributing to 19.82sen per share.
-Based on the latest FY, the EPS was reduced to 6.69sen and the PE was 12.55x.
-The group has the most prime young oil palm trees ranging from 9 to 18 years, making the overall of 54.32% or 30372Ha from the oil palm planted area.
-The Average Selling Price (ASP) of CPO and PK has shown a CAGR of 13.15% and 11.00% from 2020 to 2023 respectively, reaching the highest ASP in 2023.
-Based on the industry overview, Malaysia is the second largest exporter of global palm oil supply, with 74 million tonnes recorded in 2020.

Personal Opinion
-The group has maintained a net operating cash flow in FY2020, FY2021, FY2022, and FY2023 with the amount of RM251.3M, RM481.7M, RM373.3M, and RM387.9M respectively which may be seen as the cost optimization measure practiced by the group.
-The nature of the group business is tied to the FCPO price, which may be influenced by several factors such as the El Niño effect, etc.
-Due to the fluctuation of FCPO price, the group revenue has shown an inconsistent trend based on the existing financial information, between FY2020 to FY2023.
-One of the largest IPOs and it may attract investors to trade hence, the stock volatility may be expected to be larger.

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By: Jshen Ng