KUALA LUMPUR (June 18): PublicInvest Research has derived a fair value of RM1 for Main Market-bound Johor Plantations Group Bhd (JPG), pegged to 12x FY2025 earnings per share, a 40% discount to the industry average of 20x, which it deems justifiable, given the company’s i) smaller plantation landbank size, ii) lack of new planting activities, and iii) higher than market average plantation age profile.

The mid-sized plantation company is slated for listing on July 9 at an initial public offering price of 84 sen.

In a note on Tuesday, the research house said JPG’s growth will be driven by: i) CPO price movements, ii) lower fertilizer cost, which is the largest cost component, and iii) improving fresh fruit bunch yield on the back of favourable weather and higher productivity.

PublicInvest said JPG’s competitive strengths include: i) strong operational track record, which consistently outperforms Malaysian Palm Oil Board benchmarks, ii) adherence to sustainable palm oil practices as it has a long established RSPO status since 2009, which fetches a premium for its palm oil products, and iii) a strong management team with vast industry experience of more than 19 years.

The research house said key drivers may include: i) establishment of an integrated sustainable palm oil complex in Johor to venture into downstream market and increase its palm oil milling capacity, ii) the improvement of its the productivity and efficiency via accelerating mechanisation, and adoption of high-yielding planting materials, which currently make up 44% of its planted area, and iii) expansion of renewable energy income by upgrading biogas plants to produce biomethane and bio-CNG, which are supplied to Gas Malaysia green ventures under long-term contracts.

“We understand that the Sedenak plantation landbank, which is located close to the Sedenak Tech Park, could see the tremendous potential for asset monetisation given the mushrooming data centre projects in that area,” it said.