This article first appeared in The Edge Financial Daily on November 28, 2017

KUALA LUMPUR: Sime Darby Plantation Bhd (SDP), which will debut on Thursday on Bursa Malaysia, will be looking to explore and expand opportunities to increase its presence in other key geographical markets in Southeast Asia, the US, Europe, Africa and the Middle East.

Through these initiatives, SDP targets for its downstream operations to contribute more than 20% of its profit before interest and tax within the next five years, the company said in a statement yesterday.

The statement came after Fitch Ratings assigned a long-term foreign currency issuer default rating (IDR) of “BBB+” to SDP, with a stable outlook, and a senior unsecured rating of “BBB+”.

“The news came at an opportune time and augurs well for the prospects of our business as we enter this next phase in our journey. SDP has come very far, especially in the last 10 years. We are now equipped and ready to move ahead after the listing, to take the company to the next level,” said its executive deputy chairman and managing director Tan Sri Mohd Bakke Salleh.

The company also said it is in a unique position to mitigate some of the main challenges faced by palm oil players, which relate to increased protectionism and fluctuating taxes, tariffs and levies in export markets.

This, it said, is due to its presence in a number of producing and consuming countries and its ability to switch sale offerings between unrefined and refined products, certified sustainable palm oil (CSPO) versus segregated CSPO, which enables it to hedge against any potential impact on revenues from specific markets.

SDP plans to extend its market reach beyond the five top consuming markets, namely, Malaysia, Indonesia, India, the European Union and China. These markets accounted for 53.2% of the global palm oil consumption or about 33.2 million tonnes in 2016.

Last Wednesday, Fitch also removed the rating watch negative (RWN) on the US$1.5 billion (RM6.17 billion) sukuk programme and the outstanding issuance under the programme, which were transferred to SDP from Sime Darby Bhd.

At the same time, Fitch assigned Sime Darby a “BB+” rating from “BBB+” for its long-term foreign- and local-currency IDRs, after noting the group will be a smaller company following its demerger from its property and plantation businesses.

Fitch also downgraded Sime Darby’s senior unsecured rating to “BB+” from “BBB+”, while removing all the company’s ratings from RWN, which had been in place since March 2.