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Mewah International Inc - Are East Java refinery plans on hold?

6/3/2013 - Mewah International says high crude palm oil (CPO) inventories in Malaysia and Indonesia will keep margins under pressure.

Hence, it remains cautious over near-term prospects.

It is focusing on increasing refining capacity in Malaysia and selling other non-oil consumer products.

Meanwhile, Mewah used the remaining S$2.4 mln of its IPO proceeds to finance its capital expenditure.

The company announced these earnings for Q4 FY12:

Revenue: -24.3% to US$767.8 mln
Gross profit: -34.4% to US$52.3 mln
Net Profit: -28.6% to US$9 mln
Exceptional gains: US$4.8 mln vs Nil
Cash flow from operations: US$48.7 mln vs US$35.8 mln
Dividend: 0.55 cents vs 0.50 cents

Mewah’s revenue fell mainly due to 9.6% lower sales volumes and 16.2% lower average selling prices.

CIMB Research maintained its UNDERPERFORM rating with a target price of S$0.46 due to poor earnings.

Investor Central. Asian insights for global investors. We ask the tough questions of Asian companies which global investors need answers to.

Question
Question

1. Why did it suddenly prioritise Malaysia over Indonesia to invest in a refinery?

In another reversal of its expansion plans, Mewah has put on hold its Indonesian refinery and will resume the construction of its Sabah refinery, slated to be commissioned by end 2013.

CIMB Research suspects this decision was motivated by the change in Malaysia’s palm oil export tax policy, which puts Malaysian refiners on a level playing field with their Indonesian peers.

Question
Question

2. When does it plan to invest in a refinery in East Java then, if not now?

We have sent these questions to the company to invite them for an on-camera interview, and/or seek their written response.

Sofar, we have not had a reply (which is why you are seeing this message).


Sources & further information

Sources
Sources


Statutory disclosure
Press release
Presentation materials
CIMB Research Report

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