MKH Oil Palm (East Kalimantan) Berhad (“MKHOP”), an upstream oil palm plantation company based in East Kalimantan, Indonesia, has commenced its share buyback program since September 25, 2024. It has so far repurchased 6.17 million shares up to Oct 22.

Under the share buyback program mandated by its shareholders during its Extraordinary General Meeting on September 10, 2024, the company is authorized 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 reduce 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 is committed with 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% to 6%.

So far, MKHOP has paid 2 sen, with the previous dividend payment on June 12, 2024.

Financially, MKHOP has almost no borrowings and is in a net cash position. As at 30 June, 2024, the company has a cash pile of RM199.65 million and unaudited retained earnings of RM200.59 million.

So far for the nine months ended June 30, 2024, MKHOP has achieved cumulative net profit of RM43.21 million on the back of revenue of RM261.63 million.

MKHOP’s nine months net profit for FY24 has already exceeded its entire FY23 results by 38%.

The future is looking bright for MKHOP with Malaysia’s benchmark crude palm oil (CPO) futures hitting six-month highs of RM4,350 earlier this month.

During Budget 2025, the Malaysian government in its economic report expects the price of crude palm oil (CPO) to continue to be well supported, averaging between RM3,500 ringgit and RM4,000 ringgit per metric ton in 2025.

In its quarterly production figures disclosure to Bursa, MKHOP reported that its CPO production rose 3% to 91,635 metric tonnes (MT) for FY24 compared to the previous year.

Over the same period, its FFB production dropped 1% to 406,658 MT while its palm kernel production rose 4% to 17,609 MT.

MKH Oil Palm (East Kalimantan) Berhad Chairman Tan Sri Dato’ Alex Chen Kooi Chiew @ Cheng Ngi Chong said:

“The financial year ended Sep 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 land bank.

“On the capital market aspect, our share buyback and dividends will act as a natural stabiliser, besides showing confidence in the company’s prospects.”

“We are confident that our integrated and prudent way of doing business will ensure sustainable growth”.

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