16 July 2019

IMQ, Jakarta —  PT Mahkota Group Tbk is focusing on developing business in the downstream sector. The company with the ticker code MGRO will operate a refinery plant through its subsidiary PT Intan Sejati Andalan and a kernel crushing plant in Dumai in June this year.

This plant will produce cooking oil with a production capacity of 1,500 tons per day, while the kernel crushing plant will produce 400 tons of palm kernel oil per day.

Through its subsidiary PT Dumai Pracipta Abadi, the company will add a stockpile tank of 20,000 metric tons, currently they have a stockpile tank with a capacity of 76,000 tons.

In order to launch the business focus, namely downstreaming by building a refinery plant and adding the stockpile tank, the company has prepared a capital expenditure of IDR 200 billion. Funds are obtained from the IPO proceeds and partly from bank loans.

To build the plant, the company requires funds of IDR 330 billion, of which funds from IPO proceeds amounted to 90 billion, IDR 120 billion from internal cash, and IDR 120 billion from bank loans.

With the operation of the factory, MGRO is aiming for revenue of IDR 5 trillion, an increase of around IDR 150% with a net profit of IDR 123 billion. Throughout last year, the company managed to obtain revenue of IDR 2 trillion.

Based on MGRO's financial statements in the third quarter of 2018, the company pocketed revenue of IDR 1.46 trillion, up 19% over the same period in 2017 of IDR 1.23 trillion.

Their revenue from CPO sales amounted to IDR 1.1 trillion, until September 2018 they managed to book a profit of IDR 45.41 billion.

Meanwhile, Panin Sekuritas analyst William Hartanto said, the performance of PT Mahkota Group Tbk (MGRO) is predicted to be positive as the assets of this plantation issuer increase.

“With the increase in MGRO assets in the first six months of last year, it is estimated that financial performance will also increase,” he said in his research.

William assessed that the construction of a refinery plant that produces cooking oil will certainly help support the company's performance in the future.

However, he sees MGRO's performance will encounter obstacles from Crude Palm Oil (CPO) prices which are still low and the trend is weakening.

“So, I think the palm oil processing products that are now running can be used as anticipation, because the price of raw materials is low, the palm oil needs to be processed so that the selling price is even higher,” he explained.

In terms of stocks, he recommends buying MGRO shares with a target price of up to IDR 500 per share.

Source : https://www.imq21.com/news/read/526869/20190709/090521/Melihat-Kinerja-Mahkota-Group-Kembangkan-Bisnis-di-Sektor-Hilir.html