Kim Loong Resources Berhad (KLRB) is a company primarily engaged in the activities of cultivation of palm oil across Malaysia. The Groups core businesses are upstream operations - plantation and milling operations, and downstream operations which comprised of refining, trading and marketing of palm products. Please note that the below schedule refers to Kim Loong Resources Berhads upstream (i.e. palm oil and refined, bleached, deodorized Palm Oil in to other products/producers) activities.

Assume has the following the oil palm production, revenue and investment schedules

Assume that you are a recently appointed hedge strategist for Kim Lo and that you have been requested to prepare a report on your recommendations of hedging strategies considering the ongoing COVID-19 pandemic, for presentation to the board of director at its next board meeting. You have been specifically requested to address the following issues:

To identify the specific financial risk exposures faced by Lim Loong Resources Berhad, given the above schedules (please limit the financial risks to what is taught in this unit). In this section, you MUST discuss the outlook (forecast) over the hedging horizon, for each underlying variable and identify whether it will present a risk to the firm. You need to provide adequate evidence to support the justification for your responses. (15%)

Crude Palm Oil- Expected production Quantity Representative Index/underlying Jan - 2022 1,860,000 tons Foreign Revenue From South Africa - expected in 3 months 13,450,530 ZAR Portfolio Representative Index / Security Investment Type Amount Beta US Shares (equities) US$30m 1.5 S&P 500 US$10.5m Eurodollars Commercial paper (Maturity - 6 months to be issued in 3 months' time) Crude Palm Oil- Expected production Quantity Representative Index/underlying Jan - 2022 1,860,000 tons Foreign Revenue From South Africa - expected in 3 months 13,450,530 ZAR Portfolio Representative Index / Security Investment Type Amount Beta US Shares (equities) US$30m 1.5 S&P 500 US$10.5m Eurodollars Commercial paper (Maturity - 6 months to be issued in 3 months' time)