KL Kepong: Eyes Indonesian palm oil refineries

Stock Name: KLK
Company Name: KUALA LUMPUR KEPONG BHD

Research House: ECMLIBRA

Price Call: HOLD

Target Price: 24.59

KL Kepong (KLK MK, Hold, TP:RM24.59), will build three refineries in Indonesia to tap higher margins after Jakarta lowered its processed edible oil export taxes, a senior company official said. With 56% of KL Kepong's 248,498 ha of total landbank in Indonesia, the firm had "little choice" but to build refineries there to enhance the value of its crude palm oil from these estates, the firm's plantations director, Roy Lim, said. "Indonesian refined materials are available at sometimes a US$15 - US$25 (RM45 - RM75) a tonne discount to what is being offered by Malaysian refineries in their endeavour to take advantage of the margins and to capture markets," Lim told Reuters in an interview ahead of the Bursa Malaysia Palm Oil Conference. (StarBiz)

Source: ECM Newz Bits 05 March 2012