Johor Plantations grows stronger after listing. Can it continue to flourish?

Johor Plantations Group Bhd managed to push beyond its resistance of 95.5 sen on Aug 23. The counter rose to a high of RM1 on Aug 23, way above its listing price of 84 sen each.

Johor Plantations was listed on the Main Board on July 9, rising over 10% on its maiden trading day. If the stock has completed its base-building since listing, the next leg up may be next in the near term.

The company raised RM735 million by selling a 35% stake, or 835 million shares, making it the largest IPO since March 2022, Johor Plantations engages in the production of palm oil, palm kernels and bio-methane. With the raised funds, it aims to become an integrated player in the palm oil industry, producing specialty oils and fats.

According to the prospectus, half of the total to be raised from the public issue, or about RM170 million, has been earmarked to construct an integrated sustainable palm oil complex and replanting activities.

The demand for Johor Plantations’ IPO was decent with the public tranche was oversubscribed by 2.18 times by the Malaysian public. The offer for sale was also fully taken up by Bumiputera and institutional investors.

The IPO was also backed by seven cornerstone investors — including Retirement Fund Inc (KWAP), abrdn, and AHAM Asset Management. They bought 40.8% of the institutional offering, while the remaining shares available for bookbuilding were covered 5.19 times.

For Johor Plantations, the public issue raised RM389.76 million, of which more than half was earmarked for capital expenditure. The offer for sale, meanwhile, raised RM345.2 million, which accrued entirely to the selling shareholder, Kulim (Malaysia) Bhd which retained a 65% stake in Johor Plantations after the listing.

The listing of Johor Plantations may not be as exciting compared with the other IPOs which saw much better gains. However, it doesn't mean it won’t be able to surge further.