Visit Note
- Five key points: 1) Strong FFB growth to continue for rest of FY9/10 coming from existing plantations and contribution from Indonesian JV; 2) Continued double digit growth expected for FY11 3) CPO price view unchanged; 4) More details on new Germany plant acquisition;; and 5) More land acquisitions coming?
- KLK’s recent acquisition of the 150,000-tonne Uniqema oleochemical plant in Emmerich, Germany is a step in the right direction, in our view. Although this plant reported an operating loss of €2.1m in 2009, KLK expects to be able to turn around the operations to record a profit within the first year of operations. This
confidence stems from its plans to: 1) upgrade the old technology that the plant currently runs on; 2) implement a hedging policy on its sales and purchases contracts, which is non-existent currently; and 3) integrate its upstream operations with the downstream operations in EU to achieve operational synergies. One of the main advantages of this Uniqema plant is the ownership of its own jetty and its ample storage tanks and warehousing facilities, as KLK intends to now send all its oil destined for the European market to Emmerich instead of Rotterdam. This will not only save KLK storage costs, given that currently, all of its oil is stored in third party tanks in Rotterdam, but will also give it a competitive advantage against other
downstream players.
RHB Equity 360° - 20 July 2010 (KLK, Axis REIT; Technical: L&G)
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