Matang chairman confident of better outlook for crude palm oil

KUALA LUMPUR: Smallish plantation company Matang Bhd expects to register a strong performance this year on favourable crude palm oil (CPO) prices and robust demand.

The newly listed group is also looking at transforming from a small firm into a midtiered plantation company in the years to come.

According to the group’s chairman Datuk Teh Kian Ming, CPO prices would likely remain above RM2,700 per metric tonne through 2017, while global demand for palm oil would be underpinned by the high biofuel mandate in the United States.

“Lower palm oil stockpile anticipated in the first quarter of 2017, and the high biofuel mandate in the United States will also help to ensure demand for palm oil,” Teh said.

“All these factors, together with the support of our Government, ensure a promising and thriving outlook for Matang,” he said during the listing ceremony of Matang here yesterday.

Matang Bhd made a firm debut on the ACE Market of Bursa Malaysia yesterday, opening one sen higher at 14 sen, compared with its offer price of 13 sen.

“The listing of the company on the ACE Market of Bursa Securities is a timely progression given the steady growth of the company in the past and more importantly, the proceeds from the IPO will soon be utilised to extend the fundamental growth of Matang by further enhancing yield through greater use of fertilisers, through our continuous replanting exercises as well as improving the infrastructure within the estate to increase operational efficiency and to reduce production costs,” Teh said.

Post-listing, the group’s focus would be on its replanting exercise and improving yield as well as cost efficiency.

Teh said the group was currently stepping up its replanting exercise in Matang Estate and at the same time increasing its fresh fruit bunch (FFB) yield through greater usage of fertilisers.

“Over the next two years, we will purchase the high quality ‘Felda Yangambi’ line of germinated seeds to be used in our replanting exercise,” Teh said, noting the line of germinated seeds were superior due to their historicall higher FFB yield.

“As part of a sustainable business, we want to plan ahead for replanting to improve the age profile of the oil palm trees,” he added. The group said it would spend RM9mil out of the RM16.9mil raised from the initial public offering for the purpose of purchasing fertilisers for the estate over the next five years.

Apart from focusing on better yielding seeds, Matang’s focus wll also be on improving operational efficiency by upgrading road infrastructure and water drainage system in Matang Estate and to purchase new equipment for its operations.

“These measures will make our estates more efficient, reduce costs and boost the group’s revenue and profitability,” Teh said.

“With the above, Matang is positioning itself to transform from a small player into a mid-tiered sustainable pure plantation group with strong productivity and efficient track record,” he added.

Matang at present has 1,096 hectares of oil palm plantation under its belt, with 77% of the area planted with trees at peak production ages of five to 20 years.

The group’s relatively young age profile oil palm trees contributed to FFB yields coming in at more than 24 metric tonnes per ha, which had consistently exceeded the average yield in Malaysia in recent years.

Matang’s public offer of 130 million new 10 sen shares were oversubscribed 4.21 times.