KUALA LUMPUR (July 18): Ecoscience International Bhd debuted on Bursa Malaysia's ACE Market on Monday (July 18), opening at 29 sen, down one sen from its initial public offering (IPO) price of 30 sen.

At the time of writing in the morning trading session, the palm oil milling services provider was traded at 28.5 sen, with some 36.77 million shares changing hands so far. 

At 28.5 sen, Ecoscience was valued at RM96.9 million. 

The Johor-based company raised a total of RM24.7 million from the IPO exercise, of which RM5 million has been allocated for business expansion in Indonesia, and RM1 million for the expansion of its environmental and energy efficiency business. 

A further RM7.9 million and RM7 million have been earmarked for working capital and repayment of bank borrowings respectively. The remaining balance of RM3.8 million is for the defraying of listing expenses.

“The versatile palm oil is a crucial commodity and staple worldwide. Hence, the need for new palm oil mills and refineries will continue to be there, not to mention the older facilities that require replacements or upgrades,” said Ecoscience managing director Wong Choi Ong in a statement in conjunction with the company’s listing. 

“With that in mind, we want to continue to better ourselves in the global arena, starting with the establishment of an office and fabrication facility in Indonesia. We believe our neighbouring country’s standing as the largest producer of palm oil in the world will provide us with an excellent platform to bring Ecoscience to greater heights,” Wong added. 

Ecoscience executive officer Pan Kum Wan said at a virtual press conference that the company sees growth opportunities in Indonesia that are in line with expansion plans there. "There is a quick time for requests from customers, and we also see an advantage from the shipment costs.” 

"They (Indonesia) are also very fast in terms of biodiesel, moving to B40. But in Malaysia, we are still moving to B20," he said. 

Pan elaborated that Malaysia also faces some labour shortages, which have been exacerbated recently by Indonesia's decision to stop sending workers here. "Indonesia has very good and skillful workers. We will start to build our plant in Indonesia, and are able to employ workers [there]."

On the other hand, Ecoscience business development director Thing Jin Suan said the company’s business is not directly related to the development of the palm oil market. 

"For example, during the Covid-19 period, when the palm oil price was below RM4,000 or RM3,000, our business was still going on, and we were not directly affected by the palm oil price," he said. 

He was responding to reporters’ questions on whether the company sees any impact from Indonesia's decision to remove the palm oil export levy until Aug 31. 

"So in the short term, we remain positive [on our business],” Thing added. 

The company recorded a net profit of RM1.17 million for the first quarter ended March 31, 2022, on a revenue of RM25.71 million. As for the breakdown of revenue contributions, Malaysia led with RM13.62 million, followed by Gabon (RM9.47 million), Indonesia (RM2.35 million), and Liberia (RM262,000). 

For the financial year ended Dec 31, 2019 (FY19), the company posted a profit after tax of RM12.5 million, followed by RM6.5 million in FY20 and RM8.1 million in FY21. 

Revenue stood at RM170.9 million, RM153.7 million and RM153.2 million in FY19, FY20 and FY21 respectively. 

Ecoscience has a dividend policy as it intends to recommend and distribute a dividend of at least 20% of its annual audited consolidated profit after tax attributable to its shareholders. The company is backed by an unbilled order book of RM107 million as of May 27.

Hong Leong Investment Bank Bhd is the principal adviser, sponsor, underwriter, and placement agent for the IPO exercise.