Sawit Sumbermas Sarana, a palm plantation company, rose in its trading debut on the Indonesia Stock Exchange on Thursday, despite being slammed by a nongovernmental organization report that accused it of illegal deforestation on contested land.
In its first day of trading, the stock rose 7.5 percent to Rp 720, up from Rp 620 in its initial public offering. By comparison the benchmark stock measure, the Jakarta Composite Index, fell 1.4 percent.
Amsterdam-based Profundo and Washington-based Climate Advisers in a report released on Monday claimed that 95 percent of Sawit Sumbermas’s land bank is contested, instead of just 23 percent disclosed in the prospectus of its recent IPO.
The report also said that “a significant part of the company’s land bank overlaps with actual or potential orangutan habitat.”
Harry Nadir, finance director of Sawit Sumbermas, on Thursday sought to play down the claims, saying such allegations from NGOs were “not a new thing” for palm oil companies across Indonesia and Malaysia.
The company plans to expand its cultivated area and build palm oil mills after it gained fresh funds from its IPO.
The company raised Rp 1 trillion ($83 million) from the sale of 1.5 billion shares, or 15 percent of its stake, to the public last week.
Sawit Sumbermas will use 60 percent of the proceeds to cultivate an additional 5,500 hectares of land per year. The company owns 78,071 hectares of plantation area, of which only 33,000 hectares have been cultivated.
The company is also operating four palm mills with an annual capacity of 1.44 million metric tons of CPO production.
Nadir set revenue and net income increases of 10 percent and 15 percent, respectively, next year as it raises production.
Nadir said the company is setting “a conservative target” in revenue and profit next year considering the uncertainties still in the global crude palm oil market.
Nadir also said that the company is setting an average selling price estimate at $750 per metric ton for its CPO next year. That compared with a forecast by the Indonesian Palm Oil Association which expects prices in the range of $840 to $850 per metric ton.
The company expects its CPO production to rise to as much as to 320,000 metric tons next year from an estimated 275,000 metric tons of CPO this year, according to Vallauthan Subraminam, a director at Sawit Sumbermas.
The growth is similar to that estimated for 2013.
Total revenue at the company was Rp 1.88 trillion and net income at Rp 561.69 billion last year.