IOI ready to settle RSPO issues

IOI Corp's plantation in Johor

KUALA LUMPUR: Plantation giant, IOI Corp Bhd has submitted documents to comply with conditions set by the Roundtable on Sustainable Palm Oil (RSPO) for the lifting of the suspension.

CIMB Research expect this case to be deliberated at RSPO’s complaints panel (CP) meeting in June 2016 and the suspension could be lifted if the CP was satisfied with IOI’s submission.

“We gathered from the RSPO website that the CP meets once a month via teleconference. We are of the view that if the CP is satisfied with IOI’s submission and accepts its plans, the CP is likely to recommend that the RSPO Board of Governors lifts IOI Corp’s RSPO certification suspension.

“However, should there be queries by the CP on the submissions, the lifting of suspension may be delayed until the next meeting,” CIMB Research said.

IOI Corp has submitted to the RSPO CP a completed action plan, quarterly progress report, together with group sustainable resource allocations and policy initiatives document, endorsed by IOI Corp’s board of directors. It has also completed and submitted to the RSPO the peer review assessment of the three high conservation value (HCV) reports between 2009-2014.

It added that there was a possibility that the challenge in Switzerland would be dropped once the suspension is lifted.

Last month, IOI Corp filed challenge proceedings in the Zurich Court of Switzerland against the RSPO board of governors’ decision to suspend the company. Following this, the court has set a date for conciliatory hearing by the Justice of Peace with both parties present.

“We are of the view is that if the documents submitted are accepted and the suspension is lifted, there is a possibility that this challenge would be dropped, as IOI Corp would no longer be suspended,” CIMB said.

The research house said it was positive on this development as it raises the likelihood of IOI’s RSPO certification suspension being lifted soon, allowing the group to regain some of the sales and customers lost due to the RSPO certification suspension since April 4.

“We estimate that the suspension may reduce FY6/17 net profit by up to 7% (assuming the group is suspended for a year). Maintain ‘hold’ and sum-of-the-parts (SOTP) target price of RM4.52, as we think the market has priced in suspension concerns at today’s price. Potential upside is higher CPO prices and key risk is prolonged RSPO suspension,” it said.