KUALA LUMPUR (Nov 10): The proposed listing exercise of MKH Oil Palm (East Kalimantan) Bhd (MKHOP), the plantation arm of property developer MKH Bhd, on the Main Market of Bursa Malaysia is expected to raise RM150.42 million.
According to MKH’s circular issued to the local bourse on Friday, the group’s shareholders are to vote on the proposed listing of MKHOP, as well as various pre-listing corporate exercises to facilitate the listing, in an extraordinary general meeting on Nov 28.
MKHOP’s initial public offering (IPO) exercise will involve a public issue of 220 million new shares (21.5% of its enlarged share capital of 1.023 billion shares), as well as an offer for sale from MKH’s wholly-owned subsidiary Metro Kajang (Oversea) Sdn Bhd of 30.71 million existing shares (3% stake) in MKHOP.
Based on an indicative IPO price of 60 sen per share, the public issue is expected to raise RM132 million — the bulk of which will be used to expand the oil palm plantation business as well as enhance the efficiency of fresh fruit bunch harvesting activities and palm oil milling activities.
From the proceeds raised, the company has earmarked RM42 million for the expansion of its land bank for oil palm plantation, RM10 million for capital expenditure (capex) for existing plantation land, RM9 million for the setup of a palm kernel crushing facility, RM12 million for refurbishment and upkeep of existing palm oil mills, RM10 million capex for refurbishment and construction of workers' housing quarters, and RM10 million capex to expand coverage of electricity supply.
Another RM30 million is to be utilised for the repayment of a loan to MKH Plantation Sdn Bhd, a wholly-owned subsidiary of MKH. The remainder of RM9 million is for the estimated listing expenses.
Meanwhile, MKH is to accrue RM18.43 million from the offer for sale of MKHOP shares under the listing exercise. Of this, RM17.7 million of the proceeds are to go towards repayment of bank borrowings, while the remainder RM730,000 is to defray the estimated expenses of the listing exercise.
“As at Oct 11, the outstanding banking facilities of [MKH] stood at RM367.8 million...based on the average interest rate of approximately 5.65% per annum, the group is expected to generate annual interest savings of approximately RM1 million per annum,” MKH said.
MKH said the indicative IPO price of 60 sen was negotiated between MKHOP and M&A Securities Sdn Bhd — the adviser, underwriter and placement agent — taking into consideration MKHOP’s net assets per share of 51 sen, and an price-earnings ratio of 10.2 times based on earnings per share of 5.88 sen for the financial year ended Sept 30, 2022 (FY2022).
Post IPO, MKH is to own a 63.07% stake in MKHOP, followed by the Malaysian public and selected investors (27.95%), entitled shareholders (4.6%), PT Hikmat Aliran Sukses (3.93%), and Ivakijaya Sdn Bhd (0.45%).
The shareholders of PT Hikmat are Taufik Nugraha (50%) and Indria Gunawan Leman (50%), while Ivakijaya is owned by Ong Khek Gee (50%) and Shamsol Anuar Rohani @ Rosani (50%).
MKHOP posted a profit after tax (PAT) of RM60.14 million for FY2022, versus RM77.45 million for FY2021 and RM18.69 million for FY2020. As for revenue, the company logged RM315.82 million for FY2022, RM306.61 million for FY2021 and RM282.32 million for FY2020.
As for MKH, excluding MKHOP’s earnings, the group posted a pro forma PAT of RM70.06 million for FY2022, compared with RM23.81 million for FY2021, and RM47.58 million for FY2020. Pro forma revenue stood at RM652.31 million for FY2022, RM606.96 million for FY2021, and RM629.6 million for FY2020.
At Friday's noon break, shares in MKH stood unchanged at RM1.40, giving the group a market capitalisation of RM821.17 million.