Journey to Wealth
Plantation Sector - B10 to be launched today OVERWEIGHT
- According to news reports, MPOB (Malaysian Palm Oil Board) will be launching the B10 biodiesel programme today.
- The initial launch will involve vehicles belonging to the Plantation Industries and Commodities Ministry.
- Roughly 75% of the B10 implementation is targeted to be completed by year-end.
- B10 is expected to take out about one million tonnes of palm oil from the system when it is fully rolled-out.
- Palm oil inventory in Malaysia stood at 2.63mil tonnes as at end-December 2012.
- This development is not new as the B10 programme was already announced in December 2012.
- We are neutral on the implementation of B10.
- In spite of the targeted completion date of year-end, we reckon that the B10 programme could take longer-than-expected to be rolled-out.
- As with the B5 programme, we believe that B10 would be implemented in the central region of Kuala Lumpur, Putrajaya, Selangor, Melaka and Negeri Sembilan first.
- This is because infrastructure and distribution channels for biodiesel are already in place in the central region.
- B5 has been rolled-out in the Central Region since November 2011. B5 was supposed to be implemented nation-wide by 2014F.
- Companies with biodiesel operations would benefit from the implementation of B10. These include Sime Darby.
- We maintain a positive stance on the plantation sector. We believe that CPO prices would improve underpinned by softening palm oil production and favourable demand.
Source: AmeSecurities
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