KUALA LUMPUR (July 18): Ecoscience International Bhd’s share price was trading below its initial public offering price (IPO) of 30 sen on its maiden day, although the company’s order flow is unlikely to be affected by the current sharp fall on crude palm oil (CPO) prices.
Ecoscience opened at a discount at 29 sen against its IPO price. The counter was traded between a high of 29.5 sen and a low of 25.5 sen on Monday, before it closed at 26 sen. Its trading volume was at 66.79 million shares. The company has a market capitalisation of RM88.4 million based on share price of 26 sen.
Ecoscience is an integrated palm oil milling services provider specialising in the construction of plants and supporting facilities for palm oil mills and plantations, supported by its in-house fabrication capabilities in palm oil milling equipment.
Speaking at a virtual press conference on Monday, business development director Thing Jin Suan pointed out that the company’s order flow is not affected by the movement of CPO prices.
“For example, during the Covid-19 period, when the palm oil price was below RM4,000 or RM3,000, our business was still going on, and we were not directly affected by the palm oil prices. So in the short term, we remain positive [on the prospects of our business],” Thing explained.
The company’s order book stood at RM107 million as at May 27.
He was responding to questions on whether the big drop on CPO prices will have an impact on the company. The edible oil prices have tumbled from RM6,500-level in end-April to around RM3,600-level.
The Johor-based company raised some RM24.7 million from the listing exercise. It has allocated RM5 million for business expansion in Indonesia. The company intends to incorporate a wholly-owned subsidiary in Indonesia and develop a new fabrication facility and office in Balikpapan in East Kalimantan province.
The new facility is expected to commence operations by the fourth quarter of 2023.
Ecoscience executive officer Pan Kum Wan said the business expansion in Indonesia is expected to shorten the response time to requests from the Indonesian customers and reduce shipping costs.
“We will be able to enhance our prospects in securing new contracts for the expansion or development of palm oil mills and facilities,” he added.
On the other hand, Pan highlighted that Malaysia faces a labour shortage issue, setting up operation in Indonesia is expected to help ease the problem. “We will start to build our plant in Indonesia, and are able to employ workers [there]. Indonesia has very good and skilful workers.”
A further RM7.9 million and RM7 million have been earmarked for working capital and repayment of bank borrowings respectively. The remaining balance of RM3.8 million is for the defraying of listing expenses.
Ecoscience has adopted a dividend policy to distribute a dividend of at least 20% of its annual audited consolidated profit after tax to reward shareholders.
The company posted a net profit of RM1.17 million for the first quarter ended March 31, 2022 (1QFY22). Quarterly revenue was at RM25.71 million, mainly derived from the construction of plants and facilities segment, and fabrication of equipment segment.
Malaysia was the largest market contributing approximately 53% to the group’s total revenue for 1QFY22. As for the breakdown of revenue contributions, Malaysia led with RM13.62 million, followed by Gabon (RM9.47 million), Indonesia (RM2.35 million), and Liberia (RM262,000).
For the financial year ended Dec 31, 2021 (FY21), the company’s net profit came in higher at RM8.1 million against RM6.5 million in FY20. However, it was lower compared with RM12.5 million in FY19.
Annual revenue has been on a downtrend at RM153.2 million in FY21, RM153.7 million FY20 and RM170.9 million FY19.