Malaysian plantations to feel impact of new Indonesia rule

Business & Markets 2013
Written by Ho Wah Foon of theedgemalaysia.com
Monday, 29 April 2013 15:26
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KUALA LUMPUR (April 29): Public Investment Bank said it is likely to
cut its CPO forecast prices by RM200-250/mt from RM2,750/mt
projected for this year following news that Indonesian is looking to make
some changes to its PLANTATION [] regulations by the end of this
month.
The regulations, which Indonesian press said are aimed at opening up
the industry to smaller local players there, will impose a 100,000 ha cap
on plantation groups with the same management and owner.
“We think the impact could be detrimental to some Malaysian plantation
companies, especially those that have upcoming plans there,” said
Public Investment Bank, which is retaining its “neutral” call on the
plantation sector.
It cited Genting Plantations, Kuala Lumpur Kepong (KLK) and Sime
Darby, which have over 100,000 ha plantation landbank in Indonesia, as
being hit.
KLK, which emerged the top loser at 3.06 pm today, fell 34 sen or 1.6%
to RM21.04 on trades of 225,000 shares. Genting Plant was flat at
RM8.70 while Sime Darby was down one sen at RM9.43.
“The change in regulation could also derail expansion plans for some
smaller players like Felda Global Ventures, TSH Resources, TDM and
IOI Corp that intend to acquire more plantation landbank in Indonesia,”
the report by Public Investment Bank stated.
“We will soon revisit our CPO forecast for FY2013 and FY2014 to reflect the prevailing prices…We will likely cut our CPO
forecast prices by RM200-250/mt from RM2,750/mt currently,” said the investment bank.