, Singapore

How Wilmar could reap gains from lower CPO prices

It could lead to lower export tax rates.

According to Maybank Kim Eng, Wilmar is a beneficiary of lower CPO prices on the back of its mid-to-downstream niche in the market.

Here's more:

In general, companies with a midto-downstream exposure stand to benefit from a lower CPO price environment.

This is because the prices of their final products, namely, cooking oils and fats, do not decline by the same magnitude as CPO prices due to price stickiness at the retail level and the fact that they are food staples.

In addition, lower CPO prices enable mid-to-downstream companies to enjoy lower export tax rates. This has therefore led to an expansion of margins at the downstream level. 

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