Johor Plantations Group jumps 7% in Malaysia’s largest IPO debut since 2022

[KUALA LUMPUR] Malaysian palm oil producer Johor Plantations Group made its debut on Bursa Malaysia’s main stock exchange on Tuesday (Jul 9), with its share price rising 7 per cent from the initial public offering (IPO) of 84 sen per share.

Shares in Johor Plantations Group opened flat at 84 sen, but quickly climbed 10.7 per cent to 93 sen within the first hour of trading.

At the market close, it ended 7 per cent higher at 90 sen, with over 178 million shares changing hands.

The IPO is the largest in Malaysia since March 2022, following the listing of dairy producer Farm Fresh on Bursa Malaysia’s main market, which raised RM1 billion (S$286.3 million).

This marks the second listing of a plantation company after MKH Oil Palm’s listing in April, which raised RM136.4 million.

The Johor state-owned Johor Plantations Group offered 875 million shares in the listing, representing up to a 35 per cent stake. At the closing price of 90 sen a share, its market capitalisation is RM2.3 billion.

Prior to the listing, Johor Plantations Group was oversubscribed by more than two times by the Malaysian public.

The IPO was backed by seven cornerstone investors – including abrdn Islamic Malaysia, abrdn Malaysia and Aham Asset Management – which make up about 37.2 per cent of the IPO shares.

Mohd Faris Adli Shukery, managing director of Johor Plantations Group, expressed the company’s ambition to embrace sustainable operations and become a fully integrated palm oil producer by venturing into downstream segments, such as specialty oils and fats.

Post-IPO plans

The Malaysian palm oil industry has come under scrutiny from international markets for operations deemed unsustainable. In addressing such challenges, Johor Plantations Groups aims to halve its carbon output by next year.

Citing Mohd Faris, Bloomberg reported on Tuesday that Johor Plantations Group intends to utilise its IPO proceeds of RM735 million to build a palm oil facility powered by renewable energy, replanting ageing trees and repay debts.

The company will launch a specialty oils and fats refinery that is a joint venture with global food ingredient manufacturer Fuji Oil. It is expected to be completed in 2026, and will boost the company’s revenue by at least 20 per cent.

Johor Plantations Group also plans to develop new income streams with three bio-methane plants that will run by the end of the year.

Chye Wen Fei, analyst at Hong Leong Investment Bank Research, noted that there is a high barrier for new entrants to the oil palm plantation business in Johor, given limited potential for long-term expansion of brownfield landbank for oil palm plantation and high land costs, as well as limited availability of land areas.

The extensive regional experience that Johor Plantations Group possess, coupled with the large landbank it owns in Johor (around 60,000 hectares), provides operational scale for cost competitiveness in its expansion of plantation area and palm production, he added.

PublicInvest Research noted that Johor Plantations Group’s landbank at the Sedenak area, which is located close to Sedenak Tech Park, will see tremendous potential for asset monetisation given the mushrooming of data centre projects in the area.