23/03/2012 (The Star) - Investors are positive about Kuala Lumpur Kepong Bhd’s (KLK) expansion plans for its palm oil operations in Indonesia, as the company’s stock was the top gainer yesterday after rising 40 sen to close at RM23.82.

On March 20, KLK announced that it proposed to acquire a 90% stake in Indonesian PT Global Primatama Mandiri (PT GPM) for RM3.6mil.

The group will acquire a 52.4% stake in PT GPM from Handojo Leman Byono and another 37.6% from Joniansyah via its subsidiary KL-Kepong Plantation Holdings Sdn Bhd, which will subsequently make PT GPM a subsidiary of KLK.

PT GPM has a certificate of approved location of 7,400 ha in Kecamatan Kelay, Kalimantan Timur, for development into oil palm plantations.

RHB Research Institute noted in a report that 55% of KLK’s plantation land bank was in Indonesia, and the company intended to integrate its operations further by expanding downstream in that country.

“We are positive on these plans as this move would also help KLK address the margin imbalance in Malaysia caused by the Indonesian export tax structure.” (Last year, Indonesia reduced its palm oil export tax)

The research unit noted that KLK was setting up a RM300mil refinery and oleochemical facility in Dumai, Riau.