THIS IS THE REASON MAHKOTA GROUP (MGRO) IS CONFIDENT THAT THE REVENUE TARGET OF IDR 3,2 TRILLION WILL BE ACHIEVED
18 November 2020
The high selling price of crude palm oil (CPO) is a breath of fresh air for PT Mahkota Group Tbk (MGRO). This CPO company is confident that the double-digit top line growth target for this year's performance can be met.
Just so you know, MGRO is aiming for a revenue target of IDR 3.2 trillion. This amount increased by around 63.78% compared to last year's revenue realization of IDR 1.95 trillion. Meanwhile, the company is also targeting EBITDA of IDR 105 billion this year.
This optimism did not come suddenly. MGRO Corporate Secretary Elvi revealed, the increase in CPO prices in recent months is the main reason the company is confident that this year's performance will be sweet.
Based on company records, the average selling price (HJR) of MGRO CPO in the first nine months of this year reached IDR 8,001 per kilogram (kg). This value is higher than the HJR for the same period last year which was only IDR 6,471 per kg.
The increase in HJR was also accompanied by positive market demand. As proof, the company's CPO sales volume rose 36.76% year-on-year (yoy) to 227,179 tons in January-September 2020. Previously, the realization of MGRO's CPO sales volume in January-September last year reached 166,104 tons.
On the other hand, the company's performance this year also received additional revenue contributions from the sale of a new refinery product line, namely Refined, Bleached and Deodorized Palm Oil (RBDPO). For your information, MGRO has just operated a new RBDPO plant with a capacity of 1,500 tons per day in the first half of this year.
“RBDPO production until September 2020 reached 37,947 tons with sales of 35,445 tons,” Elvi told Kontan.co.id, Saturday (17/11).
As a result, MGRO's total revenue in the first nine months of this year jumped 85.42% on an annualized basis (yoy) from IDR 1.36 trillion to IDR 2.53 trillion. When compared to this year's revenue target of IDR 3.2 trillion, revenue realization in the first nine months of this year has reached 79.25%.
It's just that, indeed MGRO still posted a net loss for the period attributable to owners of the parent entity of IDR 37.11 billion in January-September 2020 as expenses increased in several expense items. In January-September 2019, MGRO scored a net profit for the period attributable to owners of the parent entity of IDR 24.14 billion.
MGRO hopes that the positive CPO price trend can continue throughout the fourth quarter of this year. In this case, positive catalysts are expected to come from the Indonesian Government's efforts to increase the use of CPO at the domestic level for the biodiesel program and the Diwali celebrations in India in November this year.
Understandably, demand for CPO usually increases during Diwali celebrations due to the increased consumption of cooking oil requirements for making food such as biryani and fried snacks such as jelebi in India.
According to Elvi, MGRO will take advantage of the opportunities available by making every effort to increase production of CPO and refinery products. In addition, MGRO will also continue to pursue opportunities in the export market for RBDPO products.
For this reason, MGRO is pursuing an RBDPO production target of 110,000 tons until the end of the year. Target export markets targeted for RBDPO products include India, Malaysia and Singapore. Just a note, currently the volume of RBDPO export sales reaches 21% of the company's total RBDPO export sales volume.
“The Company will gradually increase the volume of export sales (RBDPO) which is of course adjusted to market demand and actively offer products through partner trading companies for export purposes in other countries,” Elvi concluded.