KUALA LUMPUR: Upstream oil palm plantation company Johor Plantations Group Bhd (JPG) ended its first day on Bursa Malaysia's Main Market up 7.14 per cent or six sen to 90 sen.
The company made its debut flat at 84 sen at the opening, with a total of 57.19 million shares changing hands.
At 11am, the stock rose to 92 sen, up 9.52 per cent, with 109 million shares traded for a market capitalisation of RM2.3 billion.
JPG raised around RM735.0 million, with RM389.8 million coming from the public issue of 464.0 million new ordinary shares, and RM345.2 million from the sale of 411.0 million existing ordinary shares.
From the proceeds of the public issue, about RM196.8 million will be allocated to build an integrated sustainable palm oil complex, which supports the company's move into the downstream segment of the plantation value chain as well as replanting activities to ensure the long-term sustainability of its plantations.
Additionally, around RM167.4 million and RM6.7 million are designated for repaying bank loans and working capital, respectively.
JPG said the remaining funds will cover the estimated listing expenses.
Hong Leong Investment Bank Bhd (HLIB) noted that the plantation company has considerable regional experience, particularly in Johor.
It said the experience in managing plantation estates in the area positions the group to capitalise on opportunities to increase its plantation area and acquire Roundtable on Sustainable Palm Oil (RSPO)-certified fresh fruit bunches (FFB) from third parties, thereby sustaining and expanding its palm oil production.
As a result, the investment bank has forecasted JPG's core net profit to increase by 27.7 per cent to RM213.8 million for the financial year 2024 (FY24).
This will be driven by growth in FFB output, reduced production costs, and a slightly higher assumed crude palm oil (CPO) price of RM4,000 per tonne compared to the realised average CPO price of RM3,989 per tonne.
"We project financial year 2025 (FY25) core net profit to decline by 14.1 per cent to RM183.6 million, as we expect marginal FFB output growth and production cost decline will be outweighed by lower CPO price assumptions of RM3,800 per tonne (versus average CPO price assumptions of RM4,000 per tonne for FY24)," it added.
HLIB has initiated coverage on the company with a 'buy' recommendation and a target price of 99 sen.