Last update: 16/05/2019
KUALA LUMPUR, May 16 (Bernama) -- MIDF Research has downgraded its call on Kuala Lumpur Kepong Bhd (KLK) to “‘sell” and lowered its target price to RM18.77 from RM22.39 in view of weaker future earnings performance, as crude palm oil (CPO) and crude palm kernel oil (CPKO) prices were set to remain weak.
In a research note today, it said the continuously bleak CPO and CPKO prices environment had lead to a notable reduction in KLK’s revenue, despite an improvement in the fresh fruit bunches (FFB) production.
Yesterday, KLK reported a higher net profit of RM142.96 million for the second quarter ended March 31, 2019, up from RM106.15 million in the corresponding period of last year.
Revenue slid 15.9 per cent to RM3.94 billion from RM4.69 billion a year ago, dragged down by the poor performance of its plantation and manufacturing segments.
The group also announced an interim dividend of 15 sen for the first half 2019.
MIDF Research said it had revised KLK’s financial years 2019 and 2020 earnings downwards to RM667.7 million (-22.5 per cent) and RM832.6 million (-16.2 per cent) respectively, based on the lower CPO and CPKO price assumptions.
“We also view that the annual dividend payout would be capped at 45 sen in the foreseeable years compared with 55 sen previously,” it added.
The research house said the stock’s current valuation of more than 30 times was also quite a stretch as it did not correspond with the existing low palm oil price environment.
At 12.30 pm, KLK’s shares dropped 28 sen to RM24.12 with 70,800 traded.
Primary Industries Minister Teresa Kok with British Minister of State and the Pacific Mark Field during her recent visit to Europe.
LONDON: In the face of the impending passing of the Delegated Act to phase out palm oil by the European Union, Primary Industries Minister Teresa Kok is positive that all is not lost as her European mission on palm oil has opened more doors for negotiations.
The minister, with her entourage of senior officials from the ministry, Malaysian Palm Oil Board (MPOB), Malaysian Palm Oil Council (MPOC) and Malaysian Palm Oil Certification Council (MPOCC) were on a 10-day trip between May 3 and May 13 to London, Brussels, Berlin and Rome, where they met senior officials in their mission to explain Malaysia’s stand on the palm oil situation.
In Italy, where the delegation met the under-secretary of the Foreign Affairs Ministry Manlio Di Stefano and the Environment, Land and Sea Protection Minister Sergio Costa, Kok said the response was very positive.
“They were impressed that Malaysia still has a lot of forest cover. We told them that we still have 58.4 per cent forest cover. We shared with them our efforts on sustainable palm oil certification, where the government came out with funding to help the small farmers for the certification, so they are impressed with all the efforts put in by Malaysia,” she said before leaving for Malaysia on Monday.
She added that the president of the Foreign Affairs Committee of the Italian Parliament, Marta Grande, had suggested the formation of an Italy-Malaysia parliamentary friendship group where the Italian parliamentarians could visit Malaysia and understand the oil palm cultivation, as well as Malaysia’s efforts to replant its forest.
The Italians, she said, with the new information available, felt there should be an ongoing discussion on issues relating to palm oil.
She said senior officials at the Vatican had also proposed the setting up of a team of scientists from the Academy of Science of the Vatican to evaluate Malaysia’s report on red palm oil.
“If red palm oil is proven to be helpful to the children of poorer countries, where it will be easier for some international groups including the Vatican, to feed the poor, they are going to consider the promotion of red palm oil.
“They will also send a representative to attend a biodiversity conference in July in Kuala Lumpur, where we will discuss further on how to promote palm oil especially in those regions that need food aid and international aid,” Kok said of her meeting with Cardinal Peter Turkson, the Prefect of Dicastery for Promoting Integral Human Development, and Archbishop Paul Gallagher, Secretary for Relations with States of the Holy See.
The minister reiterated the importance of inviting European lawmakers and journalists to visit Malaysia and have a clearer picture of all the sustainability efforts that have been done and to invite them to participate in the one million tree-planting efforts in Sabah.
Although the minister felt that the Delegated Act by the EU would be passed and adopted by the EU, the doors were still open for discussion.
“We just need to work harder with different groups to explain our country’s situation more often.
“We also need to look at our communication strategies in Europe.”
Before her departure after the 10-day palm oil economic and promotion mission, the minister also met British Minister of Primary Industries for the Department of Environment, Food and Rural Affairs Therese Coffey and Minister of State and the Pacific Mark Field.
Source : New Straits Times
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Last update: 16/05/2019
PETALING JAYA, May 16 (Bernama) -- The Ministry of Primary industries has received a number of requests from China, expressing interest in buying large quantities of palm oil and palm-based products from Malaysia following the Prime Minister’s official visit to Beijing recently.
Minister Teresa Kok Suh Sim said besides China, requests for palm oil shipments were also received from China, South Korea and even South African countries.
“Although palm oil price is rather low now, we can work together to explore other markets and there will be more buyers for our palm oil,” she told a press conference after attending the “PM’s Post Visit to China: Achievements & Prospects” Forum in Subang Jaya here today.
Kok said the current low palm oil price was influenced by external factors such as the US-China trade war, as well as lower soybean oil performance.
Malaysia’s palm oil exports to the country is expected to increase 20 per cent or about 400,000 tonnes per year following Tun Dr Mahathir Mohamad’s visit to China recently.
According to industry observers, Malaysian palm oil exports to China are expected to jump to about 2.26 million tonnes in 2019 from 1.86 million tonnes in 2018.
Malaysia is expected to export an additional supply of a minimum of 1.9 million tonnes of palm oil to China over a five-year period, starting from 2019 with the volume estimated at RM4.56bil based on an average price of US$600 per tonne.
On her scheduled visit to China at the end of this month, Kok said she will be witnessing an agreement of joint research on the production of biodiesel from palm oil.
Commenting on her recent 10-day trip to four European countries, Kok said shed engaged the European Parliament, as well as the European Council on their stance against palm oil as well as the Delegated Act.
“Though I didn’t have a very high hope, we still hope that the act won’t be adopted by the European Parliament and (European) Council.
“But during the trip, I also managed to meet European commissioners, as well as governments to explain about palm oil. And I believe more explanation need to be done to counter the accusation that palm oil causes the deforestation as they don’t understand about the industry,” she said, adding efforts should be carried out continuously.
The Delegated Act to phase out palm oil by the European Union (EU) was passed on May 13, classifying palm oil as unsustainable by claiming that oil palm cultivation is causing significant deforestation, as well as running contrary against its green fuel targets.
Emphisising the needs to enlighten EU members, Kok believes that Malaysia still stands a chance after the appointment of new EU parliamentarians.
“The EU election next week will see the appointment of new members and even though the dedicated regulation was passed by the European Council, the door is not closed for palm based biofuel and we should further improve the quality and sustainability effort, especially in the wild life conservation and enrichment of forest.
“We have also allocated a big sum of money for the adoption of the Malaysian Sustainable Palm Oil (MSPO) certification for smallholders, hence, when we want to talk to Europe again, particularly the newly-appointed parliamentarians, we will have better results and higher MSPO adoption rate,” she added.
The government has announced a RM100 million grant to help independent planters to secure the MSPO, for which the government will fully bear the certification costs from the existing 70 per cent.
This incentive is targeted for oil palm planters who have landholdings of between 40 hectares to 1,000 hectares.
The government will increase aid for MSPO auditing costs from the current 30 to 50 per cent and this incentive will be reimbursed to oil palm planters, after they have secured the MSPO certification for their estates.