MP Evans, AEP and REA fall on Indonesia export rule changes plans

Shares in MP Evans Group PLC, REA Holdings PLC and AEP Plantations PLC dropped on Wednesday, after Indonesia’s president announced new natural resource export controls which will affect crude palm oil.

MP Evans traded 25% lower at 1,424.82 pence, while REA was down 11% at 107.25p and AEP down 19% at 1,812.69p, in London on Wednesday afternoon.

Prabowo Subianto told parliament that future sales of all natural resources – starting with crude palm oil, coal and ferrous alloys – will go through state-owned enterprises appointed by the government, AFP reported.

‘This means that the proceeds from every export sale will be passed on by the state-owned enterprises appointed by the government to the business operators managing those activities,’ he said, adding that this will optimise tax revenue as Indonesia attempts to tackle the economic headwinds caused by the Middle East conflict.

AFP’s Mariette Le Roux and Taris Iman noted that Indonesia’s Palm Oil Farmers’ Organisations Association criticised the regulation, which it said could ‘fundamentally alter the structure of national palm oil trade and open wide space for trade monopolies’.

Responding to Prabowo’s announcement, palm oil producer MP Evans said it is monitoring developments closely with its local management team, advisers and industry partners.

The Tunbridge Wells, England-based company said any changes to export mechanisms will not have a direct impact, although there some indirect impact as prices adjust.

‘The board remains confident in the long-term fundamentals of the Indonesian palm oil sector and in the resilience and efficiency of the group’s operations,’ MP Evans added.

AEP also said it does not expect a direct impact, but forecast possible indirect effects through pricing adjustments.

AEP, which operates plantations in Malaysia and Indonesia, also noted that it sells all of its CPO production domestically to refineries in Indonesia and does not export directly.

Like MP Evans, AEP stated that it ‘remains confident in the long-term fundamentals of the Indonesian palm oil sector and in the resilience and efficiency of [its] operations.’

And similarly, Indonesia-focused palm oil producer REA commented: ‘REA sells its palm products into the domestic Indonesian market rather than directly into export markets, so any immediate direct impact would appear to be limited.

‘However, as with any policy affecting Indonesian palm oil trade flows, there could potentially be indirect pricing or market effects, which may be either positive or negative, depending on the eventual implementation details.’

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