23 January 2019

JAKARTA. Crude palm oil (CPO) prices have strengthened so far this year. CPO prices on the Bursa Malaysia Derivatives Exchange for the April 2019 delivery contract, on Tuesday (22/1), strengthened 4.67% to RM 2,263 per ton. This has made palm oil producers optimistic that palm oil prices will improve this year.

CEO of PT Mahkota Group Tbk (MGRO) Usli Sarsi said this strengthening was in line with increasing demand. “Especially for national use, under the B20 and B30 programs from the government. This resulted in limited CPO stock,” he said yesterday. Mahkota Group, for example, this year will operate a refinery plant that will absorb CPO production.

Vice President Director of PT Tunas Baru Lampung Tbk (TBLA) Sudarmo Tasmin also predicted that CPO prices would increase as the harvest of fresh fruit bunches (FFB) began to decrease. “Our estimate is that CPO prices will even exceed RM 2,400,” he said, Tuesday (22/1). Sudarmo added that the B-20 biodiesel program will also be followed by Malaysia. This adds to the positive sentiment.

Corporate Communication of PT Sawit Sumbermas Sarana Tbk (SSMS) Andre Taufan Pratama estimates that the average CPO price in the current range is already quite good. Namely US$537 or RM 2,260 per ton.

This year, SSMS is targeting a 23% production growth and 29% sales increase compared to the previous year. To support the target, SSMS will rely on its two newest mills to produce CPO at 60 tons per hour each.

In total, SSMS has eight CPO mills capable of boosting production by 560 tons per hour. In addition, Andre explained that the company will increase sales with roadshows to several countries in Asia and Europe in the first quarter of 2019.

Meanwhile, TBLA will maintain stock levels at adequate levels. “We will also increase CPO procurement if the price is still low in the market,” Sudarmo said.

For MGRO, Usli said the company will focus on developing a variety of refinery products that will have high selling value. “We will also diversify through cooperation with third parties to build renewable energy from production waste,” Usli said.

Head of Research at Narada Aset Manajemen Kiswoyo Adi Joe believes that an increase in CPO prices will increase the share prices of palm oil issuers. He predicts that CPO prices will be in the range of RM 2,000-RM 2,599 until 2019.

For CPO listed stocks, he recommends BWPT at IDR 300, GZCO with a target price of IDR 150, LSIP at IDR 1,800 and AALI at IDR 15,000.

Source : Harian Kontan terbit 23 Jan 2019