KUALA LUMPUR (Nov 28): Property group MKH Bhd has obtained approval from its shareholders for the proposed listing of its wholly owned plantation subsidiary MKH Oil Palm (East Kalimantan) Bhd (MKHOP) on the Main Market of Bursa Malaysia.
According to the group's filing on Bursa Malaysia, 99.998% of the shareholders at the extraordinary annual general meeting held on Tuesday (Nov 28) voted for the resolution to list MKHOP, while 0.002% voted against.
MKHOP’s proposed initial public offering (IPO) comprises a public issue of 220 million new shares, representing 21.5% of its enlarged share capital.
Additionally, there will be a proposed offer for sale of 30.7 million existing shares by MKH's wholly owned subsidiary Metro Kajang (Oversea) Sdn Bhd, representing 3% of the enlarged share capital in MKHOP.
Based on an indicative IPO price of 60 sen per share (final IPO price to be determined at a later stage), MKHOP aims to raise RM132 million from the public issue, while the offer for sale will raise RM18.4 million, bringing the total fundraising exercise to RM150.4 million.
MKH group executive chairman Tan Sri Chen Kooi Chiew @ Cheng Ngi Chong said a portion of the proceeds from MKHOP’s IPO will be allocated towards the acquisition of plantations or lands for plantation development within close proximity to its existing estates.
MKHOP operates two estates in East Kalimantan, Indonesia, with a total land area of 18,205.3 hectares. About 93.4% of this land, or 17,008.8 hectares, is planted with oil palm trees, and is supported by a palm oil mill and a jetty.
"The estates’ strategic positioning within a 100-kilometre radius of Nusantara, the new capital city of Indonesia, places MKHOP in an advantageous position to leverage on the future capital city’s growth. The group is poised to benefit from the economic transformation of East Kalimantan, driven by the development of Nusantara," Chen said in a statement.
"We are pleased to have received approvals from our shareholders for the proposed listing of MKHOP. The upcoming listing of MKHOP on the Main Market marks a pivotal step in unlocking the full potential of our investment in MKHOP and enhancing shareholders’ value at MKH’s level," he added.
During the nine-month period ended June 30, 2023 (9MFY2023), the plantation segment, which is the second largest contributor to MKH’s performance, generated RM244.8 million in revenue, or 32.6% of MKH’s total revenue of RM750.8 million.
In terms of profit before tax (PBT), the plantation segment contributed RM29.6 million, or 34.2% of MKH’s total PBT of RM86.5 million, which was 59.3% lower than 9MFY2022’s RM72.8 million mainly due to lower crude palm oil (CPO) and palm kernel (PK) average selling prices and higher production costs caused by various macroeconomic headwinds.
Barring any unforeseen circumstances, the proposed IPO of MKHOP is expected to be completed by the first quarter of 2024. Upon completion, MKH's shareholding in MKHOP will be reduced to 63.07%, from 100% currently. The Malaysian public and selected investors will own 27.95%, while the remaining stakes will be for entitled shareholders (4.6%), PT Hikmat Aliran Sukses (3.93%), and Ivakijaya Sdn Bhd (0.45%).
At the time of writing, shares of MKH were trading up two sen or 1.42% at RM1.43 apiece, with a market capitalisation of RM838.76 million.