Sarawak Planters Jaya Tiasa, Ta Ann unaffected by Wilmar’s policy, says CIMB

by **Cals** Wed 16 Apr 2014, 00:32

Sarawak Planters Jaya Tiasa, Ta Ann unaffected by Wilmar’s policy, says CIMB

Business & Markets 2014

Written by Jeffrey Tan of theedgemalaysia.com

Tuesday, 15 April 2014 16:22

KUALA LUMPUR (Apr 15): Sarawak plantation firms expect minimal impact from Wilmar’s new sourcing policy as they have planted up the bulk of their land banks over the past few years, according to CIMB Investment Bank Research.

These firms include Jaya Tiasa Holdings Bhd and Ta Ann Holdings Bhd.

The Sarawak plantation firms also expect to complete developing the rest of their land before end-2015.

In a note today, CIMB IB reaffirmed its view that Sarawak planters offered one of the highest output growth prospects among the Malaysian planters, with its top pick being Ta Ann.

Earlier this year, Wilmar International Limited, which buys 45% of the crude palm oil (CPO) production in Sarawak, introduced its "No Deforestation, No Peat, No Exploitation" pledge.

This affects Sarawak plantation firms as their land banks are largely located on peat land.

“We understand that Jaya Tiasa and Ta Ann's CPO sales to Wilmar have not been affected by Wilmar's new sourcing policy,” said analysts Ivy Ng Lee Fang and Saw Xiao Jun of CIMB IB.

“This is owing to the fact that the new policy will not affect planters that have cultivated forest and peat land before Dec 31, 2015.”

The analysts said both players have also indicated that they would plant up their remaining peat landbank before the end of 2015.

Meanwhile, Ng and Saw pointed out that some palm oil players were planning to diversify their sales of CPO to other refiners in Sarawak or build their own refining facilities, in light of Wilmar's new policy.

The pair noted there are currently six refiners in Sarawak with a total installed capacity of approximately 2.9 million tonnes compared to Sarawak's CPO production of 3.1 million tonnes in 2013.

“Furthermore, we also note that Sarawak plantation firms expect double-digit fresh fruit bunches output growth from their estates,” said Ng and Saw.