PETALING JAYA: MKH Oil Palm (East Kalimantan) Bhd (MKHOP), an upstream oil palm plantation company based in East Kalimantan, Indonesia, has repurchased 6.17 million shares up to Oct 22 since it started implementing its share buyback programme on Sept 25.
Under the share buyback programme mandated by its shareholders at an extraordinary general meeting on Sept 10, the company is authorised to repurchase up to 5% of its total issued share capital or 51.18 million shares. Should this share buyback be implemented in full, the public shareholding of MKHOP will be reduced to 25.03% from 28.78%.
The share buyback is expected to stabilise MKHOP’s share price and to enable MKHOP to utilise its surplus financial resources more efficiently resulting in a more efficient capital structure.
The company, in a statement, said it is committed to a dividend payout of at least 50% of the company’s annual audited consolidated profit after tax attributable to the owners of the company taking into account the group’s working capital requirement. This would translate to roughly an annual yield of between 5% and 6%.
So far, MKHOP has paid two sen, with the previous dividend payment on June 12.
Financially, MKHOP has almost no borrowings and is in a net cash position. As at June 30, the company has a cash pile of RM199.65 million and unaudited retained earnings of RM200.59 million.
For the nine months ended June 30, MKHOP has achieved cumulative net profit of RM43.21 million on the back of revenue of RM261.63 million. MKHOP’s nine-month net profit for FY24 has already exceeded its entire FY23 results by 38%.
The future looks bright for MKHOP with Malaysia’s benchmark crude palm oil (CPO) futures hitting six-month highs of RM4,350 per tonne earlier this month.
In conjunction with Budget 2025, the government in its economic report said it expects the price of CPO to continue to be well supported, averaging between RM3,500 and RM4,000 per tonne in 2025.
In its quarterly production figures disclosure to Bursa Malaysia, MKHOP reported that its CPO production rose 3% to 91,635 tonnes for FY24 compared to the previous year. Over the same period, its fresh fruit bunch production dropped 1% to 406,658 tonnes while its palm kernel production rose 4% to 17,609 tonnes.
MKHOP chairman Tan Sri Alex Chen Kooi Chiew @ Cheng Ngi Chong said: “The financial year ended Sept 30, 2024 is looking bright. We are well positioned to benefit from growth in the global edible oils market and the oil palm industry in Indonesia. We take care of our shareholders twofold. On the business aspect, we will continue to actively source for new oil palm plantation land for our growth in revenues and landbank.”
