KUCHING: Analysts expect the hike in crude palm oil (CPO) tax will benefit players in the downstream process but not upstream.
The team at Maybank Investment Bank Bhd (Maybank IB Research) explained that in terms of earnings impact, the CPO export tax is generally negative for upstream players as they would not enjoy the higher CPO spot prices.
This is likely as the export duty will be either paid to the government or given as ‘discounts’ to downstream players, it added.
“Instead, we expect the 4.5 per cent has a export tax to benefit downstream players (in terms of cheaper input cost) as the export of refined palm oil products are not taxable,” the firm detailled in a note yesterday.
“This would allow downstream players to benefit from the export tax differentials.”
Among the downstream beneficiaries with Malaysian operations are Felda Global Ventures Holdings BHd, IOI Corporation Bhd, Kuala Lumpur Kepong Bhd, Sime Darby Bhd, Sarawak Oil Palms Bhd, Genting Plantations Bhd and Wilmar Ltd.
Those at a disadvantage to this tax, it said, will be the purer upstream players like Ta Ann Holdings Bhd, TH Plantations Bhd, and Boustead Plantations Bhd.
“In general, we believe a CPO export tax imposition could be positive for the industry overall as this brings hope that exports for processed palm oil exports could pick up again from April 2015 after its recent sharp decline,” it opined.
“As to whether Indonesia will respond with a similar export tax imposition (currently zero export tax as well), a decision will be known sometime within the next 10 days.
“We make no change to our earnings forecasts, target prices and calls.”