As a result of Indonesia’s new export levy structure, which is in favour of First Resources, RHB Securities reckons the palm oil producer will rake in higher earnings.

The brokerage has raised its FY2020-FY2022 earnings by 6.5%-9.2% on the back of higher downstream margins, including foreign exchange assumptions.

According to RHB, the Indonesian Government has set the crude palm oil (CPO) reference price at US$951.86 per tonne for January

At this price, CPO exports will incur an export levy of US$225.00 per tonne.


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Coupled with an export tax of US$74.00 per tonne, upstream plantation players would receive a discount of as much as US$299.00 per tonne for CPO sales in January.

Even at spot CPO prices of RM4,000 per tonne, realised CPO prices would only be at around RM2,700-RM2,800 per tonne, says RHB.

Yet this should benefit First Resources, the brokerage says.


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“We believe First Resources will benefit from the newly revised export levies in Indonesia as it channels the bulk of CPO sales to its downstream refinery, which in turn, should enjoy an additional margin advantage of US$90.00 per tonne,” the RHB research team in Singapore writes in a note dated Jan 15.

RHB has maintained its “buy” rating for the stock with a higher target price of $1.90 from $1.45 previously.

As at 2.39 pm, First Resources was flat at $1.63 with 3.5 million shares changed hands.