Thursday, January 31, 2013
Mewah: industry sources say Msia’s biggest palm oil refiner after Wilmar, will revive an earlier plan to build a palm oil refinery in east Malaysia, after the govt's decision to reform its export taxes. The govt has said it will scrap a duty-free quota on CPO exports and at the same time reduce export duty on CPO, which will boost the Malaysian refining industry's competitiveness in processing palm oil products. The lower duty should keep domestic CPO prices low, and help to encourage domestic refining. The construction of the palm refining plant, which will have an annual capacity of 0.5m tons, is scheduled to be completed in 3Q13. Mewah currently has an annual refining capacity of 2.8m tons in Malaysia. Mewah had delayed construction of the Malaysian refinery early last year so that it could focus on building one in Indonesia instead. Indonesia had changed its palm oil tax structure in Oct 2011, allowing its refiners access to cheaper feedstock, and helping Indonesian processors to boost margins to trump the established downstream palm oil refining industry in Malaysia. Mewah’s strategic shift may allude to mgt’s confidence in better prospects going forward. Mewah trades at 15.3x P/E, 1.2x P/B.