KUALA LUMPUR (June 12): Johor Plantations Group Bhd's (KL:JPG) initial public offer (IPO) on the Main Market of Bursa Malaysia is expected to raise a total of RM735 million, of which approximately RM345.2 million will be raised via an offer for sale of 411 million existing shares held by its sole shareholder Kulim (Malaysia) Bhd.
Kulim, which was previously listed on Bursa Malaysia from 1975 to 2016, is now a wholly owned subsidiary of Johor Corp (JCorp). Upon listing on July 9, Kulim will retain a 65% stake in JPG, while the IPO would offer investors up to 35% of JPG's enlarged share capital.
Of the RM735 million raised from the IPO, approximately RM389.8 million will be raised via a public issue of 464 million new ordinary shares in JPG. The public issue portion of the IPO has been opened for public application on Wednesday and will be closed on June 24.
Based on the enlarged issued share capital of 2.5 billion shares and the IPO price, which has been set at 84 sen per share, the expected market capitalisation upon listing would be RM2.1 billion, anticipated to be the largest IPO listing on Bursa Malaysia year to date.
This values JPG at approximately 12.6 times its financial year ended Dec 31, 2023 (FY2023) net profit of RM167.31 million. At 84 sen per share, JPG will be trading at about 12.5 times price-to-earnings ratio, based on its FY2023 earnings per share of 6.7 sen, according to its prospectus.
At its prospectus launch here on Wednesday, JPG shared that 50.5% of the total proceeds to be raised from the public issue, or RM196.83 million, have been earmarked for capital expenditure, including the construction of an integrated sustainable palm oil complex and replanting activities.
Meanwhile, 43%, or RM167.44 million, will be channelled towards the repayment of bank borrowings and 1.7%, or RM6.74 million, will be for working capital, while the remaining RM18.75 million will be utilised for listing related expenses.
"With these plans in motion, we are confident that JPG will not only grow its business operations but also offer better returns to our shareholders," its managing director Mohd Faris Adli Shukery said during his speech at the prospectus launch.
The board plans to distribute a dividend of at least 50% of its net profits for each financial year, according to the prospectus.
Established in 1978, JPG is an upstream oil palm plantation company operating predominantly in Johor. In connection with the IPO, the group intends to diversify into the downstream plantation business to meet its future growth aspirations of becoming a fully integrated palm oil producer. As it stands, JPG is principally involved in the production of crude palm oil and palm kernels.
JPG currently operates 23 plantation estates, of which 22 are in Johor and one is in Pahang, with a total land bank of 59,781 hectares and a total oil palm planted area of 55,904 hectares, representing approximately 93.5% of the total land area of its plantation estates. The group also operates five palm oil mills.
For FY2023, JPG recorded a net profit of RM167.31 million, down 66.2% from the previous year's net profit of RM495.59 million, mainly attributable to lower delivery volume as a result of lower oil extraction rate primarily due to adverse weather conditions and flooding in its plantation estates in March 2023, as well lower average selling prices of crude palm oil and palm kernel during the year. Revenue was also down by 28.4% to RM1.25 billion in FY2023.
The cornerstone investors already on board in the IPO are abrdn Islamic Malaysia Sdn Bhd, abrdn Malaysia Sdn Bhd, AHAM Asset Management Bhd, AIIMAN Asset Management Sdn Bhd, Areca Capital Sdn Bhd, Fortress Capital Asset Management (M) Sdn Bhd and Retirement Fund Inc (KWAP), which make up approximately 37.2% of the total 875 million IPO shares.
RHB Investment Bank is the IPO’s principal adviser, managing underwriter and joint bookrunner with AmInvestment Bank, CIMB Investment Bank, Affin Hwang Investment Bank, and CLSA.
RHB Investment Bank, AmInvestment Bank, CIMB Investment Bank and CLSA are also joint global coordinators.