Any weather disruption could amplify the pace of a CPO price increase, in view of the production
fragility evident in the sector.

The only downside risks that might flip this situation:

If consumption or export demand were to suddenly weaken substantially, leading to
an inventory buildup in the sector
Government intervention, adjusting biodiesel mandates lower: that would drive down
demand and lead to inventory buildup

1e:[] 21:[] 22:T686,

Share price an action star – but with more legs to go

Since our last call on DSNG, the share price has surged by 59% (prev.report); the question now is whether
to trim the stock – or to hold fire. We suggest there is a bigger upside risk than any downside risk, as detailed
below:
CPO price has momentum to keep climbing, going forward, while its pace will be more subtle. It
might reveal no sudden major price spike – such as the one we witnessed in 2022.
The assumption of an inevitable rise in CPO price tracks a tight supply and strong demand. CPO
inventory has consistently declined over the past 7 years, a trend that might endure, as there is
no sign of a major inventory buildup anytime soon. Limited production outlook, robust worldwide
consumption and steady export demand all point in this direction.
Aging plantation profiles in both Malaysia and Indonesia will naturally cap production capacity.
This, combined with demand going forward, will drive CPO price higher. We do suspect that
pricing power is now starting to shift to upstream producers, rather than downstream buyers.
Any weather disruption could amplify the pace of a CPO price increase, in view of the production
fragility evident in the sector.

The only downside risks that might flip this situation:

If consumption or export demand were to suddenly weaken substantially, leading to
an inventory buildup in the sector
Governmen

DSNG - The High Ground