Our meeting with Indonesia's bio-energy director revealed that the
country could raise its biodiesel usage by fourfold to 4m kl if the new
biodiesel mandates for all sectors are met. This is positive for CPO
price as it could raise CPO usage by 3.2m tonnes (11% of output).
But we suspect that its
implementation in the non-transport
sector may not be smooth and could
face technical and logistic issues. We
are, therefore, sticking with our
conservative estimate of 2m kl usage
in 2015 though we may revisit it if
Pertamina succeeds in its tender for
biodiesel. We retain our Neutral
stance on the sector and our key picks,
First Resources, IOI, Wilmar and
AALI.
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