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TSH Resources Bhd said its RM42 million fine in Indonesia involves 1,228.89 hectares of plantations outside the licensed area of its subsidiary PT Sarana Prima Multi Niaga (PT SPMN).

The fine will not reduce its reported planted area or require an impairment of its plantation assets at this time.

Analysts had flagged that risk earlier as the bigger concern for the company.

TSH Resources said the hectares were never included in its reported plantation area.

The fine will not reduce its reported planted area or currently require an impairment of its plantation assets.

Of the total area, 496.69 hectares were planted before the group acquired the subsidiary. Another 732.20 hectares were planted by local communities.

PT SPMN signed a letter acknowledging the fine on 16 Sept to facilitate negotiations on an instalment plan. It is awaiting further clarification on the fine and a subsequent appeal.

The fine will be recognised in TSH Resources’ third quarter 2026 financial statements. It will be paid in four monthly instalments of about RM10.5 million each from September to December.

The group said there would be no other material impact on its financial position or operations.

The only remaining matter involving Indonesia’s Forest Area Enforcement Task Force concerns 61.09 hectares planted outside the HGU area of another subsidiary, PT Teguh Swakarsa Sejahtera.

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Analysts Weigh In

TSH Resources first disclosed the fine last Friday (25 September), when Indonesia’s Forest Area Enforcement Task Force imposed a 184.35 billion rupiah (RM41.8 million) penalty on its indirect subsidiary, in which it owns 90%.

Analysts estimate the fine could shave more than 20% off the company’s projected earnings for the current financial year.

“We expect a small negative knee-jerk share price reaction from this announcement,” Maybank Investment Bank said.

BIMB Securities said it viewed the development negatively given the material cash outflow and uncertainty over the underlying compliance issue.

Hong Leong Investment Bank said the company may potentially be required to relinquish overlapping land to the Indonesian government. It downgraded TSH Resources to “hold”.

PT SPMN operates about 7,000 hectares of oil palm plantations and a palm oil mill in Central Kalimantan. That accounts for about 18% of TSH Resources’ planted area.

The stock fell as much as 9.5% to RM1.24 on Monday, its lowest since 21 Aug. It ended the day at RM1.25, after a loss of over 4% on Friday.

TSH Resources has yet to say why the fine was imposed.

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