TSH Resources unit fined RM42 mil by Indonesia forest task force

KUALA LUMPUR, 26 SEPTEMBER 2026 —

KUALA LUMPUR, Sept 25 — TSH Resources Bhd (KL: TSH) disclosed on Friday that its 90 percent‑owned indirect Indonesian subsidiary, PT Sarana Prima Multi Niaga (PT SPMN), has been hit with an administrative fine of 184.35 billion rupiah – roughly RM 42 million – by Indonesia’s Forest Area Enforcement Task Force (FAC).

The FAC, created by the Indonesian government last year, has already levied sizable penalties on plantation firms. In January, Genting Plantations Bhd’s Indonesian arm was fined 396 billion rupiah (about RM 96.6 million) by the same task force, underscoring the regulator’s aggressive stance toward the sector.

TSH Resources’ core business centres on oil‑palm cultivation and palm‑oil processing, with plantation assets spread across Sabah in Malaysia and Kalimantan in Indonesia. The group also participates in downstream activities through a joint venture with Wilmar International that refines palm oil, and it manufactures engineered hardwood flooring.

For the financial year ended 30 June 2026, TSH reported a net profit of RM 52.51 million, a 6.7 percent rise from RM 49.23 million a year earlier. The improvement was attributed to higher extraction rates, lower operating costs and stronger contributions from its joint‑venture operations. Revenue, however, fell 6.6 percent to RM 250.98 million from RM 268.78 million, reflecting lower sales volumes and softer average selling prices for crude palm oil.

TSH’s Bursa Malaysia filing did not specify the reason for the FAC fine, but it confirmed that PT SPMN operates approximately 7,114.14 hectares of oil‑palm estates and runs a palm‑oil mill in Central Kalimantan. The subsidiary’s business model involves cultivating oil palm, producing crude palm oil and palm kernel, and supplying fresh fruit bunches harvested from its estates.

Following the announcement, TSH’s shares closed at RM 1.37 on Friday, down six sen or 4.2 percent, leaving the company with a market capitalisation of about RM 1.76 billion.

The fine arrives as the Malaysian palm‑oil sector grapples with tightening environmental regulations across the region. Indonesia’s FAC, tasked with curbing illegal deforestation and ensuring compliance with forest‑conservation laws, has signalled that non‑compliance will attract substantial monetary penalties. The agency’s establishment last year marked a shift toward more rigorous enforcement, aiming to protect forested areas while safeguarding state revenues that can be eroded by illegal land conversion.

TSH’s statement to Bursa Malaysia noted that the first instalment of the fine would be settled by 25 September 2026, but it omitted details on the schedule for the remaining three payments. The company also refrained from commenting on whether the fine would affect its cash flow or dividend policy.

Analysts monitoring the plantation sector have highlighted that fines of this magnitude can pressure profit margins, especially when combined with declining crude palm‑oil prices. TSH’s 2026 earnings, however, showed resilience, driven by operational efficiencies and joint‑venture earnings that offset the revenue dip.

The broader regional impact of the FAC’s actions may extend beyond individual penalties. By targeting large‑scale plantation operators, the task force seeks to enforce compliance with Indonesia’s forest‑conservation framework, which could influence investment decisions by multinational agribusinesses operating in the country. Companies with significant landholdings in Kalimantan, such as PT SPMN, may need to reassess land‑use practices and strengthen environmental governance to avoid future sanctions.

TSH’s downstream partnership with Wilmar International, a major player in the global palm‑oil market, could also feel indirect effects if stricter enforcement leads to tighter supply‑chain scrutiny. While the joint venture’s contribution helped lift the group’s profit, any disruption to raw‑material sourcing from Indonesian estates could reverberate through the refining operation.

The fine shows the growing regulatory risk for plantation firms operating in Indonesia, a risk that investors are likely to factor into valuation models. TSH’s share price reaction – a 4.2 percent decline – reflects market sensitivity to compliance costs and the potential for further penalties.

Looking ahead, TSH indicated that PT SPMN will continue to meet its payment obligations under the FAC’s schedule. The company did not announce any remedial measures or changes to its operational practices in response to the fine. No further statements were made regarding the potential impact on the group’s 2027 financial outlook or its strategic plans for its Indonesian assets.