reports
- Jacquelyn Yow Hui Li
- Leow Huey Chuen
- Maskun Ramli
- Stevanus Juanda
Indonesia Daily - Wednesday, December 7, 2022
Regional Plantation: The arrival of foreign workers in Malaysia helps in crop recovery but is still far from solving the problem. Indofood Sukses Makmur (INDF IJ/BUY/Rp6,775/Target: Rp9,000): 3Q22: Strong improvement with margin expansion. Upgrade to BUY. TRADERS’ CORNER United Tractors (UNTR IJ): Technical BUY Bumi Resources (BUMI IJ): Technical BUY
- Jacquelyn Yow Hui Li
- Leow Huey Chuen
Regional Plantation - Palm Oil Sector Facing Multiple Headwinds
The arrival of foreign workers in Malaysia helps in crop recovery but is still far from solving the problem. Beside worker shortage, the Malaysia palm oil industry is also heavily taxed, with about 31% of profit paid to the government in the form of cess, taxes and levies. Government policies on palm oil trade need to take into account the price factor, producers’ margin and distribution network. Maintain MARKET WEIGHT.
AALI ASTRA AGRO LESTARI
F34 WILMAR INTERNATIONAL LIMITED
TBLA PT TUNAS BARU LAMPUNG TBK
SOP SARAWAK OIL PALMS BERHAD
LSIP PP LONDON SUMATRA INDONES PT
BAL BUMITAMA AGRI LTD
KIML KIM LOONG RESOURCES BHD
IOI IOI CORP BHD
KLK KUALA LUMPUR KEPONG BHD
SDPL SIME DARBY PLANTATION BHD
GENP GENTING PLANTATIONS BHD
HAPL HAP SENG PLANTATIONS HOLDINGS BHD
TAPG TRIPUTRA AGRO PERSADA PT
- Jacquelyn Yow Hui Li
- Leow Huey Chuen
Regional Plantation – Firm CPO Prices To Continue Into 1Q23
The CPO price outlook given by the speakers during IPOC is in line with our expectations − CPO prices should remain supported in the near term with lower-than-expected production from Indonesia and Malaysia, and strong demand from China and India. However, CPO prices would be lower yoy as: a) total vegoil production would be better yoy (especially soybean, sunflower and rapeseed) in 2023, and b) demand from China and India would be lower after stocking up in 4Q22. Maintain MARKET WEIGHT.
AALI ASTRA AGRO LESTARI
F34 WILMAR INTERNATIONAL LIMITED
TBLA PT TUNAS BARU LAMPUNG TBK
SOP SARAWAK OIL PALMS BERHAD
LSIP PP LONDON SUMATRA INDONES PT
BAL BUMITAMA AGRI LTD
KIML KIM LOONG RESOURCES BHD
IOI IOI CORP BHD
KLK KUALA LUMPUR KEPONG BHD
SDPL SIME DARBY PLANTATION BHD
GENP GENTING PLANTATIONS BHD
HAPL HAP SENG PLANTATIONS HOLDINGS BHD
TAPG TRIPUTRA AGRO PERSADA PT
- Jacquelyn Yow Hui Li
- Leow Huey Chuen
- Maskun Ramli
- Selvi Ocktaviani
- Stevanus Juanda
Indonesia Daily - Monday, November 7, 2022
Regional Plantation: The price outlook given at the IPOC conference is in line with our expectations of CPO prices remaining firm from now until 1Q23 and weakness in the recovery of both oilseeds and CPO supplies. United Tractors (UNTR IJ/SELL/Rp31,275/Target: Rp28,000): 3Q22: In line with consensus expectation: NPAT could have peaked. Maintain SELL. Telkom Indonesia (TLKM IJ/BUY/Rp4,210/Target: Rp4,860): Expansion strategies will take time to show results. TRADERS’ CORNER Telekomunikasi Ind...
- Jacquelyn Yow Hui Li
- Leow Huey Chuen
Plantation – Inventory Is Normalising; Prices Are Stable But No Cataly...
The Indonesian government has fine-tuned its DMO to: a) give flexibility to convert the exports permits between the palm products, and b) provide a higher exports ratio for those supplying to underserved provinces. With higher exports and inventories continuing to trend down, we see less pressure on domestic CPO prices. This should provide relief to upstream players, but there are still no catalysts to boost performance. Maintain UNDERWEIGHT.
- Jacquelyn Yow Hui Li
- Leow Huey Chuen
- Maskun Ramli
Indonesia Daily - Friday, October 14, 2022
Plantation: The Indonesian government has fine-tuned its DMO to provide: a) flexibility to convert export permits between palm products, and b) a higher exports ratio for those supplying to underserved provinces. TRADERS’ CORNER Bumi Resources (BUMI IJ): Technical BUY XL Axiata (EXCL IJ): Technical BUY
- Jacquelyn Yow Hui Li
- Leow Huey Chuen
Plantation – Indonesia Palm Oil Inventory To Start To Normalise From N...
From our recent visits to Indonesia, we reckon Indonesia’s palm oil inventory level will start to normalise from Nov 22 onwards given: a) the fast inventory drawdown, b) production will peak in Sep/Oct 22, and c) higher export volume to India. We expect Indonesian companies’ earnings to be lower hoh in 2H22 due to the weakening CPO prices despite strong volume. Looking into 2023, we expect earnings to be lower yoy dragged by lower CPO prices. Maintain UNDERWEIGHT. SELL AALI and LSIP.
- Jacquelyn Yow Hui Li
- Leow Huey Chuen
- Maskun Ramli
Indonesia Daily - Wednesday, September 28, 2022
Plantation: We reckon Indonesian palm oil inventory would start to normalise from Nov 22 given the strong inventory drawdown and high export volume (especially to India). TRADERS’ CORNER Wijaya Karya (WIKA IJ): Technical BUY Charoen Pokphand Indonesia (CPIN IJ): Technical BUY
- Jacquelyn Yow Hui Li
- Leow Huey Chuen
Regional Plantation - India’s Demand To Recover
India’s palm oil demand is expected to pick up in upcoming months with the current soft CPO prices and festive seasons approaching. India’s vegoil demand is back to pre-COVID-19 levels with the HORECA segments’ operations back to normal. If CPO prices continue to weaken, the Indian government may revisit CPO imports duty. Maintain MARKET WEIGHT. We prefer Malaysian plantation companies which benefit from higher than regional peers CPO prices and higher sales volume in 2H22.
AALI ASTRA AGRO LESTARI
F34 WILMAR INTERNATIONAL LIMITED
TBLA PT TUNAS BARU LAMPUNG TBK
SOP SARAWAK OIL PALMS BERHAD
LSIP PP LONDON SUMATRA INDONES PT
BAL BUMITAMA AGRI LTD
KIML KIM LOONG RESOURCES BHD
IOI IOI CORP BHD
KLK KUALA LUMPUR KEPONG BHD
SDPL SIME DARBY PLANTATION BHD
GENP GENTING PLANTATIONS BHD
HAPL HAP SENG PLANTATIONS HOLDINGS BHD
TAPG TRIPUTRA AGRO PERSADA PT
- Jacquelyn Yow Hui Li
- Leow Huey Chuen
- Limartha Adhiputra
- Maskun Ramli
Indonesia Daily - Monday, August 8, 2022
Regional Plantation: India’s palm oil demand is expected to pick up in upcoming months with the current soft CPO prices and festive seasons approaching. Bumi Serpong Damai (BSDE IJ/BUY/Rp925/Target: Rp1,200): Expecting strong marketing sales to reflect on higher NPAT. TRADERS’ CORNER Bumi Serpong Damai (BSDE IJ): Technical BUY Waskita Karya (WSKT IJ): Technical BUY
- Jacquelyn Yow Hui Li
- Leow Huey Chuen
Regional Plantation - Temporarily Suspension Of Indonesia's Exports Le...
Indonesia has announced the temporary suspension of the palm oil export levy from 15 Jul 22 to 31 Aug 22 to boost exports and increase domestic prices. The latest GAPKI press release showed that Indonesia’s palm oil inventory hit 7.2m tonnes (+75% or +3.1m tonnes ytd) as at end May 22. Suspension of the export levy will immediately increase the domestic CPO and FFB prices to ease smallholder’s pressure where some have incurred losses over the last two months. Maintain MARKET WEIGHT.
AALI ASTRA AGRO LESTARI
F34 WILMAR INTERNATIONAL LIMITED
TBLA PT TUNAS BARU LAMPUNG TBK
SOP SARAWAK OIL PALMS BERHAD
LSIP PP LONDON SUMATRA INDONES PT
BAL BUMITAMA AGRI LTD
KIML KIM LOONG RESOURCES BHD
IOI IOI CORP BHD
KLK KUALA LUMPUR KEPONG BHD
SDPL SIME DARBY PLANTATION BHD
GENP GENTING PLANTATIONS BHD
HAPL HAP SENG PLANTATIONS HOLDINGS BHD
TAPG TRIPUTRA AGRO PERSADA PT
- Jacquelyn Yow Hui Li
- Leow Huey Chuen
- Maskun Ramli
- Selvi Ocktaviani
Indonesia Daily - Monday, July 18, 2022
Regional Plantation: Indonesia to suspend export levy for 1.5 months to expedite exports and raise domestic selling prices, which translates into higher FFB prices. Telecommunications: Newcomer MORA adds diversity in telco industry and speeds up FMC implementation. TRADERS’ CORNER Bank Rakyat Indonesia (BBRI IJ): Technical BUY XL Axiata (EXCL IJ): Technical BUY
- Jacquelyn Yow Hui Li
- Leow Huey Chuen
- Maskun Ramli
Indonesia Daily - Friday, July 15, 2022
Plantation: With CPO prices starting to trend down and inventories being flushed out, domestic CPO prices are trading close to CPO companies’ cost of production, pressuring them. TRADERS’ CORNER Astra International (ASII IJ): Technical BUY Surya Esa Perkasa (ESSA IJ): Technical BUY
- Jacquelyn Yow Hui Li
- Leow Huey Chuen
Plantation – Still Under Pressure
The Indonesian government might cut/suspend the export levy and increase the biodiesel mandate, given the high inventory level domestically. With CPO prices starting to trend down since early-Jun 22 and inventories being flushed out from Indonesia, domestic CPO prices are trading close to CPO companies’ cost of production, which puts pressure on the companies. Maintain UNDERWEIGHT. SELL AALI and LSIP.
Moody's withdraws Tunas Baru's rating
Moody's Investors Service has withdrawn the B2 corporate family rating (CFR) of Tunas Baru Lampung Tbk (P.T.). The outlook at the time of the withdrawal was stable. The company currently has no rated debt. RATINGS RATIONALE Moody's has decided to withdraw the rating for its own business rea...
- Jacquelyn Yow Hui Li
- Leow Huey Chuen
Regional Plantation - Near-term Palm Oil Prices To Rebound But Unlikel...
Thomas Mielke of Oil World is expecting palm oil prices to recover as the recent 30% correction is not justifiable with supply still tight and at these prices, demand is returning as well with better demand from the biofuel segment. However, he expects prices to be lower in 2022/23 on the back of a stronger supply but will still be at a supportive level as conventional demand is returning from both the food and fuel sectors. Maintain MARKET WEIGHT. BUY HAPL MK, IOI MK and TAPG IJ.
AALI ASTRA AGRO LESTARI
F34 WILMAR INTERNATIONAL LIMITED
TBLA PT TUNAS BARU LAMPUNG TBK
SOP SARAWAK OIL PALMS BERHAD
LSIP PP LONDON SUMATRA INDONES PT
BAL BUMITAMA AGRI LTD
KIML KIM LOONG RESOURCES BHD
IOI IOI CORP BHD
KLK KUALA LUMPUR KEPONG BHD
SDPL SIME DARBY PLANTATION BHD
GENP GENTING PLANTATIONS BHD
HAPL HAP SENG PLANTATIONS HOLDINGS BHD
TAPG TRIPUTRA AGRO PERSADA PT
- Jacquelyn Yow Hui Li
- Leow Huey Chuen
- Limartha Adhiputra
- Maskun Ramli
Indonesia Daily - Tuesday, June 28, 2022
Regional Plantation: Thomas Mielke of Oil World expects palm oil prices to recover because palm oil supply is still tight and at these prices, demand is returning as well. Adaro Energy Indonesia (ADRO IJ/Not Rated/Rp2,960): Consensus expects EBITDA to grow 68.9% yoy in 2022. TRADERS’ CORNER Ace Hardware Indonesia (ACES IJ): Technical BUY Adi Sarana Armada (ASSA IJ): Technical BUY
- Jacquelyn Yow Hui Li
- Leow Huey Chuen
Plantation - Downgrade To UNDERWEIGHT, Earnings To Experience A Setbac...
Indonesia-based plantation companies have missed the opportunity to leverage on the record-high CPO prices. Profit margins are affected by the increase in exports levy, duties, and sales disruption caused by the domestic market obligations. Although business could be back to usual by late-3Q22, CPO prices might weaken once Indonesia’s exports resume. We downgrade the sector to UNDERWEIGHT and roll over our valuation to 2023 to reflect the downtrend in CPO prices. SELL AALI and LSIP.
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