Three Things That Investors Should Know About Kuala Lumpur Kepong Berhad

Palm-oil companies are prevalent in South East Asia.

Within the industry, there are companies such as Wilmar International Limited (SGX: F34), Golden Agri-Resources Ltd (SGX: E5H), First Resources Ltd (SGX: EB5) and Indofood Agri Resources Ltd (SGX: 5JS). All of which are listed in Singapore.

Kuala Lumpur Kepong Berhad (KLSE: KLK.KL), on the other hand, is listed in Malaysia. It has over 270,000 hectares of plantation land spread across Malaysia (Peninsular and Sabah), Indonesia (Belitung Island, Sumatra, central and east Kalimantan) and Liberia (Palm Bay and Butaw).

Sustainable revenue and profitability for the last 10 years

One thing that investors might look for in a company is sustainable growth. Here, Kuala Lumpur Kepong might fit that criteria.

Since 2006, revenue and profit have grown from RM3.9 billion and RM436 million to RM13.6 billion and RM870 million, respectively.

Putting this into perspective, revenue has grown 14.9% compounded, while profit has grown by 7.9% compounded during the period.

The above has been achieved, despite a challenging 2015 with low Crude Palm Oil prices.

Diversified income based

Kuala Lumpur Kepong has a diversified source of income. Based on the 2015 annual report, the approximate breakdown of revenue are as follows: 51% – palm products, 45% manufacturing and the remainder from rubber, property development and investment income.

Having a diversified income based – horizontally into manufacturing and property development, and vertically into processing and refining palm products allows the company to be more resilient to temporary challenges caused by the cyclical nature of the palm oil business.

Historical dividend

Kuala Lumpur Kepong has consistently paid out dividends for the last 10 years. In each of the last 10 years, the company has paid out between 50% and 60% of profits as dividends.

In 2015, the company paid out a dividend per share of RM 0.45. At current share price of RM 23.68, that translates into dividend yield of 1.9%.


The above is a quick overview of one of the biggest palm-oil players in Malaysia. Investors who are interested in this company should perform further research to better understand the overall attractiveness of the company as a long term investment.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.