Showing posts with label Ta Ann. Show all posts
Ta Ann : Prospect shine with Timber in 2015
Important Note of Ta Ann 2014 Report
- The log supply shortage will be expected to maintain the timber product selling prices
- Log supply of the Group will be boosted by the commencement of sustainable harvesting of acacia from our planted forests.
- Oil palm sector is anticipated to produce higher volume of FFB and CPO from the growing mature palms.
Comments:
The PBT from timber segment was 100 million in FY2014 and expected to maintain the current selling price. We expect the contribution from Timber remain strong this year, together with the anticipation of FFB volume from growing mature palms. The Ta Ann should have positive growth in 2015.
While CPO price remain stagnant, Ta Ann most likely to outshine most of the plantation stocks in 2015 with timber business.
Ta Ann comments on year 2015 Prospects
Timber market is expected to continue its uptrend in 2015, with sustained demand for logs from India and plywood products from Japan. The log supply shortage will be expected to maintain the timber product selling prices. Log supply of the Group will be boosted by the commencement of sustainable harvesting of acacia from our planted forests. Products made from the planted forest timber are popular with the buyers. The use of only logs from legal source, as verified by an international verifying body, and PEFC certified timber as input material for our manufactured products have created competitive advantage for the Group in the market. The additional new log source from sustainable planted forests will be an added edge.
The Group’s plan forward is to seek the authorities’ approval to amalgamate 4 timber licenses and 2 licenses for planted forests into a Forest Management Unit with a license tenure of over 60 years. This would assure forest conservation in tandem with sustainable forest development, and enable and facilitate forest certification to be undertaken by the Group. Future timber resource will be a combination of sustainably harvested timber from natural forests and tree plantations. The Tasmania subsidiary will be commissioning its plywood mill in Smithton in the first half of 2015 to process our veneer into plywood for sales in local Australian market which will produce cost savings and more effective marketing. Oil palm sector is anticipated to produce higher volume of FFB and CPO from the growing mature palms. The volatility of crude oil price movement will have a significant bearing on the CPO price, and hence the performance of the palm oil sector. The Group is well poised to take up the challenges of 2015 and weather changes in the operating environment. Focus of the Group management will be to step up operation fine tuning, enhance operation efficiency and efficacy, implement more stringent cost control and devise strategy to raise competitive advantage. Barring unforeseen circumstances, the Board of Directors expects a high level of productivity in 2015.
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Ta Ann
Harimau Capital Balance Model Portforlio
Model Portfolio Name : Harimau Capital Balance
Initial Investment Fund : RM50,000
Portfolio Starting Date : 01-Sep-2013
Additional Monthly RM2000 Investment Fund will be added into the Portfolio
Below are the today share buy transaction to kick start the HC Balance Model Portfolio
Initial Investment Fund : RM50,000
Portfolio Starting Date : 01-Sep-2013
Additional Monthly RM2000 Investment Fund will be added into the Portfolio
Below are the today share buy transaction to kick start the HC Balance Model Portfolio
Ta Ann banks on maturing plantations
PETALING JAYA: Sarawak-based timber and plantation groupTa Ann Holdings Bhd expects maturing oil palm plantations, which represent 60% of its total plantation land, to help further reduce the group’s cost of production (COP) this year.
Group managing director and chief executive officer DatukWong Kuo Hea said: “We are banking on our matured oil palms to contribute to a higher production of fresh fruit bunches (FFB).
“We are also hopeful that our profit can be supported by a stable crude palm oil (CPO) price, currently trading in the range of RM2,400 per tonne.”
In 2012, the group’s consolidated FFB production rose to 505,205 tonnes from 457,973 tonnes a year earlier. At present, the group’s average COP was between RM1,200 and RM1,300 per CPO tonne, Wong told StarBiz.
The COP usually covers the upkeep or cultivation expenses, fertiliser application, harvesting, transportation, other estate charges and labour costs.
Sarawak oil palm planters, in particular, have the most challenging task, as their COP tends to be higher because many are planting on peat land unlike their peninsular and Sabah counterparts, who plant on mineral soil.
Last year, Ta Ann increased its oil palm estates by 4,434ha to 35,345ha. Most of its plantations are located in the central region of Sarawak.
Kenanga Research in its recent report also believes that only oil palm planters with high FFB growth would be able to deliver higher earnings expansion in the current low CPO price environment.
The research unit is maintaining a “neutral” call on the plantation sector, with its CPO price estimate unchanged at RM2,500 per tonne for 2013 and RM2,700 per tonne for 2014.
It also said previous optimism over the sustained inventory decline had been neutralised by weak soybean oil prices, lower crude oil prices and the strengthening of the US dollar.
Where palm oil inventory in Malaysia is concerned, Kenanga expects it to register a sixth consecutive decline in June to 1.75 million tonnes, supportive of CPO prices.
Meanwhile, on Ta Ann’s unit Ta Ann Tasmania Pty Ltd (TAT) in Australia, Wong said all matters had been resolved, following the Australian government’s compensation of A$28.6mil (RM82.91mil) for surrendering partially TAT’s peeler wood supply entitlement held under contract with Forestry Tasmania.
- The Star Business Tuesday July 2, 2013 MYT 8:00:00 AM
Group managing director and chief executive officer DatukWong Kuo Hea said: “We are banking on our matured oil palms to contribute to a higher production of fresh fruit bunches (FFB).
“We are also hopeful that our profit can be supported by a stable crude palm oil (CPO) price, currently trading in the range of RM2,400 per tonne.”
In 2012, the group’s consolidated FFB production rose to 505,205 tonnes from 457,973 tonnes a year earlier. At present, the group’s average COP was between RM1,200 and RM1,300 per CPO tonne, Wong told StarBiz.The COP usually covers the upkeep or cultivation expenses, fertiliser application, harvesting, transportation, other estate charges and labour costs.
Sarawak oil palm planters, in particular, have the most challenging task, as their COP tends to be higher because many are planting on peat land unlike their peninsular and Sabah counterparts, who plant on mineral soil.
Last year, Ta Ann increased its oil palm estates by 4,434ha to 35,345ha. Most of its plantations are located in the central region of Sarawak.
Kenanga Research in its recent report also believes that only oil palm planters with high FFB growth would be able to deliver higher earnings expansion in the current low CPO price environment.
The research unit is maintaining a “neutral” call on the plantation sector, with its CPO price estimate unchanged at RM2,500 per tonne for 2013 and RM2,700 per tonne for 2014.
It also said previous optimism over the sustained inventory decline had been neutralised by weak soybean oil prices, lower crude oil prices and the strengthening of the US dollar.
Where palm oil inventory in Malaysia is concerned, Kenanga expects it to register a sixth consecutive decline in June to 1.75 million tonnes, supportive of CPO prices.
Meanwhile, on Ta Ann’s unit Ta Ann Tasmania Pty Ltd (TAT) in Australia, Wong said all matters had been resolved, following the Australian government’s compensation of A$28.6mil (RM82.91mil) for surrendering partially TAT’s peeler wood supply entitlement held under contract with Forestry Tasmania.
- The Star Business Tuesday July 2, 2013 MYT 8:00:00 AM
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Ta Ann
Ta Ann benefits from diversification, large landbank for plantation division
KUCHING: Ta Ann Holdings Bhd (Ta Ann), traditionally a major timber player, has in recent years diversified and fortified its business model with its upstream palm oil business which is now the largest profit contributor at 77 per cent of 2011 profit before tax (PBT).
In its portfolio primer for Invest Malaysia 2012, Maybank Investment Bank Bhd (Maybank IB) stated, “Being a relatively young planter, Ta Ann only began its accelerated planting in 2004.
“Thus, its current young average age profile of five years old with 32 per cent immature estate is approaching the exponential growth stage of fresh fruit bunch (FFB) production.
“Ta Ann is poised to deliver a robust 18 per cent three-year forward compounded annual growth rate (CAGR) in FFB growth.
“Its plan to plant 3,000 hectares (ha) per annum would bolster its double-digit FFB growth phase which is expected to last till 2017,” the research house highlighted. Maybank IB noted that Ta Ann had 30,911ha of planted land and about 12,000ha of plantable reserves in Sarawak as of December 2011.
Its land bank had grown at a CAGR of 28 per cent since 2005, and the group was well positioned to tap the vast one million ha of agricultural land reserves in Sarawak, Maybank IB reckoned.
“Armed with its strong balance sheet, Ta Ann can still increase leverage by MYR200 million before exceeding a net gearing ratio of 50 per cent,” the research house stated.
Meanwhile, despite the timber division’s relatively smaller earnings contribution (23 per cent of PBT in 2011), its plywood division which is highly exposed to Japan (with 90 per cent of plywood sales) could benefit from Japan’s reconstruction demand rising from the aftermath of the 2011 disasters.
Maybank IB opined that the potential divestment of its loss-making Tasmanian operations would be positive to timber earnings as well, while expecting Ta Ann’s net profit to grow at a 15 per cent three-year CAGR (2011 to 2014), mainly driven by its plantation growth.
Ta Ann’s long-term growth catalyst would emanate from its maturing forest plantation that would boost its logs supply significantly after 2015 and enhance its logs extraction yield.
Currently, 32,265ha of its total forest plantation land of 313,078ha were planted, said Maybank IB. “Tan Ann’s current valuation of 10 times 2013 price earnings ratio (PER) and enterprise value (EV) to planted hectarage of RM38,436 per ha is unjustified given its transformation from a cyclical timber play into a more defensive oil palm plantation player with quality earnings growth.
“Ta Ann is our top pick of the plantation sector for we believe this undervalued stock is due for a re-rating, buoyed by its improved earnings quality and strong growth,” Maybank IB concluded.
Based on the positive growth drivers, it remained bullish on the group and set a target price of RM9 per share (15 times 2013 PER), which implied an EV per planted ha of RM67,600 or circa eight per cent discount to industry average.
In its portfolio primer for Invest Malaysia 2012, Maybank Investment Bank Bhd (Maybank IB) stated, “Being a relatively young planter, Ta Ann only began its accelerated planting in 2004.
“Thus, its current young average age profile of five years old with 32 per cent immature estate is approaching the exponential growth stage of fresh fruit bunch (FFB) production.
“Ta Ann is poised to deliver a robust 18 per cent three-year forward compounded annual growth rate (CAGR) in FFB growth.
“Its plan to plant 3,000 hectares (ha) per annum would bolster its double-digit FFB growth phase which is expected to last till 2017,” the research house highlighted. Maybank IB noted that Ta Ann had 30,911ha of planted land and about 12,000ha of plantable reserves in Sarawak as of December 2011.
Its land bank had grown at a CAGR of 28 per cent since 2005, and the group was well positioned to tap the vast one million ha of agricultural land reserves in Sarawak, Maybank IB reckoned.
“Armed with its strong balance sheet, Ta Ann can still increase leverage by MYR200 million before exceeding a net gearing ratio of 50 per cent,” the research house stated.
Meanwhile, despite the timber division’s relatively smaller earnings contribution (23 per cent of PBT in 2011), its plywood division which is highly exposed to Japan (with 90 per cent of plywood sales) could benefit from Japan’s reconstruction demand rising from the aftermath of the 2011 disasters.
Maybank IB opined that the potential divestment of its loss-making Tasmanian operations would be positive to timber earnings as well, while expecting Ta Ann’s net profit to grow at a 15 per cent three-year CAGR (2011 to 2014), mainly driven by its plantation growth.
Ta Ann’s long-term growth catalyst would emanate from its maturing forest plantation that would boost its logs supply significantly after 2015 and enhance its logs extraction yield.
Currently, 32,265ha of its total forest plantation land of 313,078ha were planted, said Maybank IB. “Tan Ann’s current valuation of 10 times 2013 price earnings ratio (PER) and enterprise value (EV) to planted hectarage of RM38,436 per ha is unjustified given its transformation from a cyclical timber play into a more defensive oil palm plantation player with quality earnings growth.
“Ta Ann is our top pick of the plantation sector for we believe this undervalued stock is due for a re-rating, buoyed by its improved earnings quality and strong growth,” Maybank IB concluded.
Based on the positive growth drivers, it remained bullish on the group and set a target price of RM9 per share (15 times 2013 PER), which implied an EV per planted ha of RM67,600 or circa eight per cent discount to industry average.
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Ta Ann
Indian log importers return with new orders
KUCHING: India, the No. 1 buyer of Sarawak's tropical logs, has returned with new orders following the recovery of its currency.
Ta Ann Holdings Bhd financial controller Augustine Siaw said Indian log importers slowed down their buying activities in the fourth quarter last year after the rupee depreciated in value.
“They have now come back to buy our logs as the rupee has recovered,” he told StarBiz.
Ta Ann exported 74% of its 2011 export of nearly 148,000 cu m of logs to India.
Sarawak Timber Association's figures revealed that India imported 1.86 million cu m worth RM1.13bil or 60% of Sarawak's total log exports last year.
In 2010, India purchased 2.21 million cu m of Sarawak logs.
Ta Ann reported a 23% increase in average log selling prices last year, compared with 2010 but recorded a 22% drop in export volume due to lower production due to adverse weather conditions.
Meanwhile, Ta Ann and several other Sarawak-based listed timber companies reported a steep increase in their log production volumes in the first quarter this year.
During the Jan-March period, Ta Ann's production rose to 81,040 cu m or more than 12% from 72,284 cu m a year earlier.
Jaya Tiasa Holdings Bhd raised its production volume by more than 45% to 288,828 cu m from 186,222 cu m previously. Sister company Subur Tiasa Holdings Bhd's (Subur) production volume grew by more than 65% to 134,654 cu m in the first quarter from 81,067 cu m in the previous corresponding period.
Both Jaya Tiasa and Subur are under the stable of the diversified Rimbunan Hijau group.
Better weather conditions this year have facilitated log harvesting activities. Sarawak was hit by extreme wet weather in the first quarter last year which hampered logging activities.
In 2011, Sarawak's log production fell below 10 million cu m, to 9.61 million cu m, which was the lowest in more than two decades. In terms of export, the state recorded a 30% drop last year to 3.1 million cu m worth RM1.85bil.
The 2010 and 2009 volumes were 10.15 million cu m and 10.37 million cu m respectively. In 1991, the state logged a record 19 million cu m, and this was gradually reduced and maintained at about 12 million cu m a year in the past 10 years to ensure sustainable forest management. The Star Biz
Wednesday May 9, 2012
Ta Ann: Out of the woods, into the golden crop
Maybank IB Initiating Coverage 5 April 2012
Brief Overview
A planter at heart. Traditionally a major timber player in Malaysia, Ta Ann has in recent years diversified and fortified its business model. Today, it has stronger earnings quality emanating from three core businesse s, with its palm oil division being its key earnings driver:
(i) Upstream palm oil business – A total land bank of ~65,000 ha in Sarawak with 30,911 ha planted (as of Dec 2011) and another ~12,000 ha of plantable reserves.
(ii) Timber – Logging concession (435,256 ha of concession area in Sarawak) with ~400,000 m3 of logs and ~210,000 m3 of plywood produced in 2011.
(iii) Forest plantation – 313,087 ha of licensed forest in Sarawak with 32,265 ha planted as of Dec 2011. Commercial harvesting is expected to begin in 2015 after its first batch of planted forest matures.
Stronger earnings quality; reduced volatility.
A dwindling quota of natural logs in Malaysia and competition from softwood has resulted in earnings cyclicality and stagnation of earnings prospects for Ta Ann in the past. Today, after years of aggressive expansion (since 2000) into oil palm plantations in Sarawak, its oil palm division dominates earnings, contributing 82% and 77% of its 2010 and 2011 PBT.
Oil palm – leading earnings growth
From logger to planter. Ta Ann was one of the earliest among listed Malaysian loggers to venture into the palm oil industry, a vision that will continue to reward shareholders for the foreseeable years. Palm oil provides a steady and growing income source, and has diversified Ta Ann‟s earnings base from pure timber since 2006.
Consistent planting programme, from a low base.
The pure Sarawak planter started its maiden plantation in 2000 and accelerated its planting programme after 2004 (see Figure 2). Ta Ann has planted on average 3,300 ha per year since 2004, compared to an average
new planting area of 1,000 ha between 2000 and 2003. As of 31 Dec 2011, Ta Ann has 30,911 ha of oil palm planted area in Sarawak. This planted acreage puts Ta Ann on par with the likes of TSH Resources (Buy), TH Plant (Hold), and IJM Plantations (Not Rated).
High proportion of immature estates
average age ~5 years. Ta Ann has a relatively higher proportion of immature estates at 39% in 2010 (31 Dec 2011: 33%) compared to its peers (see Figure 4). Its oldest estate is merely 12 years old, and only 14% have reached peak production age (i.e. over 9 years of age - see Figure 1). Hence, with its young weighted age profile of ~5 years, it will continue to enjoy exponential growth at least for the next four years (even if new planting stops now), providing visibility in FFB output and earnings growth
18% 3-year forward FFB growth CAGR.
Given its young palm tree profile, we forecast Ta Ann‟s FFB production to grow at a robust 18% 3-year (2011-14) CAGR, which is among the highest in our universe of coverage (TSH: 19%; SOP: +12%). We expect its FFB production to grow to 760,031 tonnes by 2014 (+65% from 2011 levels). We forecast
the following yearly FFB production and growth:
The relatively lower FFB production growth of 18% in 2012 stems from a higher base following an impressive 47% growth in FFB output in 2011 to 457,973 tonnes. (Note that our 2012 forecast is approximately 9% below Ta Ann‟s internal forecast of 595,599t. Should Ta Ann‟s internal forecast
materialise, there is further upside to our earnings forecast.)
Double digit FFB growth to last till 2017.
We forecast Ta Ann‟s FFB production to grow at double-digit rates yearly till 2017. This assumes 3,000 ha of yearly new planting between 2012 and 2015, consistent
with the recent historical average. Even without new planting from 2012 onwards, Ta Ann will still enjoy double digit FFB growth till 2014 (see Figure 6).
High yields on peat soil.
Its young palm trees achieved a high FFB yield of 22t/ha/yr in 2011, ahead of our estimates given its place in the yield curve cycle (see Figure 3). We understand its best performing estate achieved >30t/ha/yr. This could be due to the more fertile peat soil and higher density of planted oil palm trees per hectare. 84% of its
planted area is on peat soil, with the remaining land on mineral soil. Ta Ann has applied appropriate land preparation procedures as peat soil necessitates higher compaction. Ta Ann also constructed extensive
drainage since peat area is flatter compared to mineral land.
Brief Overview
A planter at heart. Traditionally a major timber player in Malaysia, Ta Ann has in recent years diversified and fortified its business model. Today, it has stronger earnings quality emanating from three core businesse s, with its palm oil division being its key earnings driver:
(i) Upstream palm oil business – A total land bank of ~65,000 ha in Sarawak with 30,911 ha planted (as of Dec 2011) and another ~12,000 ha of plantable reserves.
(ii) Timber – Logging concession (435,256 ha of concession area in Sarawak) with ~400,000 m3 of logs and ~210,000 m3 of plywood produced in 2011.
(iii) Forest plantation – 313,087 ha of licensed forest in Sarawak with 32,265 ha planted as of Dec 2011. Commercial harvesting is expected to begin in 2015 after its first batch of planted forest matures.
Stronger earnings quality; reduced volatility.
A dwindling quota of natural logs in Malaysia and competition from softwood has resulted in earnings cyclicality and stagnation of earnings prospects for Ta Ann in the past. Today, after years of aggressive expansion (since 2000) into oil palm plantations in Sarawak, its oil palm division dominates earnings, contributing 82% and 77% of its 2010 and 2011 PBT.
Oil palm – leading earnings growth
From logger to planter. Ta Ann was one of the earliest among listed Malaysian loggers to venture into the palm oil industry, a vision that will continue to reward shareholders for the foreseeable years. Palm oil provides a steady and growing income source, and has diversified Ta Ann‟s earnings base from pure timber since 2006.
Consistent planting programme, from a low base.
The pure Sarawak planter started its maiden plantation in 2000 and accelerated its planting programme after 2004 (see Figure 2). Ta Ann has planted on average 3,300 ha per year since 2004, compared to an average
new planting area of 1,000 ha between 2000 and 2003. As of 31 Dec 2011, Ta Ann has 30,911 ha of oil palm planted area in Sarawak. This planted acreage puts Ta Ann on par with the likes of TSH Resources (Buy), TH Plant (Hold), and IJM Plantations (Not Rated).
High proportion of immature estates
average age ~5 years. Ta Ann has a relatively higher proportion of immature estates at 39% in 2010 (31 Dec 2011: 33%) compared to its peers (see Figure 4). Its oldest estate is merely 12 years old, and only 14% have reached peak production age (i.e. over 9 years of age - see Figure 1). Hence, with its young weighted age profile of ~5 years, it will continue to enjoy exponential growth at least for the next four years (even if new planting stops now), providing visibility in FFB output and earnings growth
18% 3-year forward FFB growth CAGR.
Given its young palm tree profile, we forecast Ta Ann‟s FFB production to grow at a robust 18% 3-year (2011-14) CAGR, which is among the highest in our universe of coverage (TSH: 19%; SOP: +12%). We expect its FFB production to grow to 760,031 tonnes by 2014 (+65% from 2011 levels). We forecast
the following yearly FFB production and growth:
- 2012: 541,207t (+18% YoY)
- 2013: 653,976t (+21% YoY), and
- 2014: 760,031t (+16% YoY).
The relatively lower FFB production growth of 18% in 2012 stems from a higher base following an impressive 47% growth in FFB output in 2011 to 457,973 tonnes. (Note that our 2012 forecast is approximately 9% below Ta Ann‟s internal forecast of 595,599t. Should Ta Ann‟s internal forecast
materialise, there is further upside to our earnings forecast.)
Double digit FFB growth to last till 2017.
We forecast Ta Ann‟s FFB production to grow at double-digit rates yearly till 2017. This assumes 3,000 ha of yearly new planting between 2012 and 2015, consistent
with the recent historical average. Even without new planting from 2012 onwards, Ta Ann will still enjoy double digit FFB growth till 2014 (see Figure 6).
High yields on peat soil.
Its young palm trees achieved a high FFB yield of 22t/ha/yr in 2011, ahead of our estimates given its place in the yield curve cycle (see Figure 3). We understand its best performing estate achieved >30t/ha/yr. This could be due to the more fertile peat soil and higher density of planted oil palm trees per hectare. 84% of its
planted area is on peat soil, with the remaining land on mineral soil. Ta Ann has applied appropriate land preparation procedures as peat soil necessitates higher compaction. Ta Ann also constructed extensive
drainage since peat area is flatter compared to mineral land.
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Company Analysis,
Ta Ann
Ta Ann proposed 1-for-5 bonus issue to improve liquidity
Positive for sentiment. Ta Ann’s proposed 1-for-5 bonus issue not only helps to improve liquidity but it will “recapitalize” its share base as its seeks to achieve sustainable growth in the long run. The stock continues to trade at an attractive 10.9x 2013 PER, with low EV/planted ha of ~MYR42,600 (43% discount to industry average). It is also poised to deliver a 15% 3-year net profit CAGR. Maintain Buy and MYR9.00
TP on 15x 2013 PER. Ta Ann is our top pick among the plantation stocks.
1-for-5 bonus issue. Ta Ann has proposed yet another 1-for-5 bonus shares (up to a maximum of 61.8m new shares), its fourth bonus issue since 2006. The proposed bonus shares enables shareholders to have
greater equity participation in riding on Ta Ann’s growth prospects as well as enhancing its liquidity. The bonus issue has no impact on our net profit forecasts. Subject to shareholders’ approval, Ta Ann expects the bonus issue to be completed in 2Q12.
Young palm tree of ~5 years to propel growth. Ta Ann is a mediumsized plantation player with 30,911 ha (Dec 2011) of planted oil palm estates in Sarawak. With 33% of the planted area still immature (and oldest tree barely 12 years), Ta Ann is poised to deliver a robust 18% 3-year 2011-14 CAGR in FFB output to 0.76m tonnes FFB by 2014. Its exponential double-digit FFB growth phase is expected to last till 2017.
Stock will continue to re-rate. Ta Ann’s business model has evolved significantly from the days of being a boring and cyclical timber player into a more defensive oil palm plantation player with growth. In 2011,
77% of Ta Ann’s profit before tax was derived from its oil palm division. Yet, it trades at an unjustified two-to-four PE multiples lower than similar size plantation peers and industry leaders in Malaysia. Moreover, Ta Ann has one of the highest earnings growth prospects among the plantation stocks under our coverage.
-Maybank IB
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Company Analysis,
Ta Ann
Jaya Tiasa vs Ta Ann
Both Jaya Tiasa and Ta Ann started from timber business and later ventured to the oil palm business. Below are the some direct comparison between the two companies.
Based on the planted palm oil area, Jaya Tiasa FFB output will overtake Ta Ann in FY2013 as Jaya Tiasa was more aggressive in planting on last 5 years.
Jaya Tiasa on the way making itself as a mid-size plantation company in next 3 years. And the company also trying to unlock its value through the recent bonus issue plan. Overall, the company can be RM5-6 billion company in 5 years time.
Note:
1. Jaya Tiasa Financial Year was ended at 31 Apr compared to Ta Ann which ended at 31 Dec. Also Jaya Tiasa has planned to changed its financial yead ended from 31 Apr to 30 Jun starting in FY 2012.
2.
Log, Reforestation & Plantation Area
Log & Plywood Division: Production & Sale Figure
Oil Palm Division Output, Revenue & Profit
Ta Ann registers strong results backed by continuing demand for its timber and plantation divisions
KUCHING: Ta Ann Holdings Bhd (Ta Ann) has seen a good year in both its plantation and timber division, recording core net profit of RM166 million for the financial year 2011.
“Excluding the total provisioning of RM13 million for asset impairment, Ta Ann’s financial year 2011 core net profit is exactly the same with our estimate but was four per cent above the consensus at RM159 million,” Kenanga Investment Bank Bhd (Kenanga Research) noted in a research report.
The report attributed the strong financial year 2011 to the higher crude palm oil prices (CPO) of RM3,348 per metric tonne and stronger fresh fruit bunch (FFB) production of 456,000 metric tonne – a 25 per cent and 47 per cent increase year-on-year (y-o-y) respectively. It had assumed 30 per cent FFB growth in financial year 2012 estimates as its young oil palm trees mature.
The research house noted that this was in line with management expectation of 25 to 30 per cent FFB growth. “Beyond financial year 2012, FFB growth should be sustained at a double digit growth rate for at least another three years as its average oil palm tree age is only 4.8 years old as compared to peak production age of 10 to 12 years old,” the research house explained.
Kenanga Research observed that the plantation division enjoyed another strong pre tax profit growth of 106 per cent y-o-y to RM167 million, which reinforced its view that Ta Ann would eventually be categorised as a plantation company.
“The company’s timber division has also seen its pretax profit jump 209 per cent y-o-y to RM51 million on the back of better average selling price for export logs and plywood,” the report explained.
However, as the research house expected softer average selling price for export logs and plywood in financial year 2012, it lowered its estimated pretax profit for the year to RM34 million. AmResearch Sdn Bhd (AmResearch) noted in its report that Ta Ann declared a second interim dividend of 10 sen per share, bringing the total for the full year to 20 sen per share. The research house had since adjusted its forecast annual gross dividend upwards accordingly, to 20 sen per share.
“We understand that the RM9.7 million impairment was made with regards to its property, plant and equipment in Tasmania, given the continuing losses of the operations there,” the report noted as it also highlighted a loss after tax of RM14 million for the plywood division, inclusive of the impairment. It went on to maintain its forecasts as it had already assumed a financial year 2011 pretax loss of RM5 million for the plywood division excluding the impairment and further annual losses of between RM10 million and RM 13 million for financial year 2012 to 2014 forecasts.
Posted on March 1, 2012, Thursday
“Excluding the total provisioning of RM13 million for asset impairment, Ta Ann’s financial year 2011 core net profit is exactly the same with our estimate but was four per cent above the consensus at RM159 million,” Kenanga Investment Bank Bhd (Kenanga Research) noted in a research report.
The report attributed the strong financial year 2011 to the higher crude palm oil prices (CPO) of RM3,348 per metric tonne and stronger fresh fruit bunch (FFB) production of 456,000 metric tonne – a 25 per cent and 47 per cent increase year-on-year (y-o-y) respectively. It had assumed 30 per cent FFB growth in financial year 2012 estimates as its young oil palm trees mature.
The research house noted that this was in line with management expectation of 25 to 30 per cent FFB growth. “Beyond financial year 2012, FFB growth should be sustained at a double digit growth rate for at least another three years as its average oil palm tree age is only 4.8 years old as compared to peak production age of 10 to 12 years old,” the research house explained.
Kenanga Research observed that the plantation division enjoyed another strong pre tax profit growth of 106 per cent y-o-y to RM167 million, which reinforced its view that Ta Ann would eventually be categorised as a plantation company.
“The company’s timber division has also seen its pretax profit jump 209 per cent y-o-y to RM51 million on the back of better average selling price for export logs and plywood,” the report explained.
However, as the research house expected softer average selling price for export logs and plywood in financial year 2012, it lowered its estimated pretax profit for the year to RM34 million. AmResearch Sdn Bhd (AmResearch) noted in its report that Ta Ann declared a second interim dividend of 10 sen per share, bringing the total for the full year to 20 sen per share. The research house had since adjusted its forecast annual gross dividend upwards accordingly, to 20 sen per share.
“We understand that the RM9.7 million impairment was made with regards to its property, plant and equipment in Tasmania, given the continuing losses of the operations there,” the report noted as it also highlighted a loss after tax of RM14 million for the plywood division, inclusive of the impairment. It went on to maintain its forecasts as it had already assumed a financial year 2011 pretax loss of RM5 million for the plywood division excluding the impairment and further annual losses of between RM10 million and RM 13 million for financial year 2012 to 2014 forecasts.
Posted on March 1, 2012, Thursday
Setting price for plywood
Saturday February 18, 2012 By JACK WONG
KUCHING: Malaysia is coming up with a
“constructed” price for plywood in the wake of its manufacturers being
penalised by South Korean authorities on charges of dumping their panel
products. This proposed price is being worked out by the International Trade and Industry Ministry, together with input from the Sarawak Timber Industry Development Corp (STIDC) and plywood manufacturers.
“As most of the manufactured plywood is for the export market, there is at present no domestic selling price,” Sarawak Timber Association (STA) general manager Dr Peter Kho told StarBizWeek.
The proposed constructed price will be determined based on several factors including the production and transport costs of plywood and will serve as a guide to plywood exporters to check against any dumping charges.
To recap, the Korean Trade Commission (KTC) imposed anti-dumping duties on the imports of Malaysian plywood last March, ranging from 5% to 38% for three years.
Possible solution: Setting the domestic selling price for plywood will hopefully end South Korean charges of dumping. The
imposition of the duties followed KTC's probe into complaints by the
Korean Wood Panel Association that nine Malaysian plywood exporters
eight from Sarawak and one from Sabah were allegedly selling their
products below production costs, thereby hurting many South Korean
plywood manufacturers.
The anti-dumping duties imposed on the eight Sarawak plywood suppliers are between 5.12% and 9.75%. The suppliers include Subur Tiasa Plywood Sdn Bhd (5.12%), Jaya Tiasa Timber Products and Hwa Seng Veneer and Plywood Industry Sdn Bhd (6.43%), Shin Yang Plywood Sdn Bhd , Forescom Plywood Bhd , Menawan Wood Sdn Bhd , Shin Yang Plywood Bintulu Sdn Bhd and Zedtee Plywood Sdn Bhd (the five companies are owned by Shin Yang group) (9.75%). The duties on Sabah-based Sinora Sdn Bhd is the highest at 38.1% while it is 8.76% on all other Malaysian exporters.
The anti-dumping duties on some of the Sarawak suppliers were significantly reduced following their appeals. The duties have adversely affected exports of Sarawak plywood to South Korea, a traditional key market.
“As most of the manufactured plywood is for the export market, there is at present no domestic selling price,” Sarawak Timber Association (STA) general manager Dr Peter Kho told StarBizWeek.
The proposed constructed price will be determined based on several factors including the production and transport costs of plywood and will serve as a guide to plywood exporters to check against any dumping charges.
To recap, the Korean Trade Commission (KTC) imposed anti-dumping duties on the imports of Malaysian plywood last March, ranging from 5% to 38% for three years.
The anti-dumping duties on some of the Sarawak suppliers were significantly reduced following their appeals. The duties have adversely affected exports of Sarawak plywood to South Korea, a traditional key market.
Palm oil exports to rise in 2012
KUALA LUMPUR: Palm oil exports from Malaysia, the world's second largest producer, may climb as much as 10% this year, expanding faster than local output and helping to drive down stockpiles and support prices, an industry group forecast.
Exports may climb to a record 19.8 million tonnes from last year's 18 million tonnes as demand in India and China gained, Malaysian Palm Oil Council chairman Lee Yeow Chor, said in an interview. The price may advance 3.9% to RM3,300 per tonne in 2012, according to Lee.
Declining stockpiles in Malaysia, which have held above 2 million tonnes since September, may help futures extend a 15% rally since October, boosting profits at growers IOI Corp Bhd and Sime Darby Bhd. Credit Suisse Group AG raised its forecast for 2012 prices 28% to RM3,200 on Feb 1, saying supplies will be capped, while demand remains strong.
“The market hasn't completely accounted for the amount of vegetable oil demand that's going to be shifting to palm oil this year,” said Erin FitzPatrick, an analyst at Rabobank International in London. Prices were holding above RM3,000 on prospects for lower global soybean oil and rapeseed oil output, FitzPatrick said by phone on Wednesday.
The April-delivery contract fell as much as 1% to RM3,166 on the Malaysia Derivatives Exchange yesterday before trading at RM3,177 at 11.55am. While the price is little changed this year, it's rallied from a 12-month low of RM2,754 on Oct 6.
Dorab Mistry, director of Godrej International Ltd, has forecast a bull market in palm oil this year as demand growth outstrips the projected increase in production. The price may reach RM4,000 by June, Mistry forecast in December.
Global soybean oil exports may decline to 8.56 million tonnes this year from 9.5 million in 2011, according to a forecast from the US Department of Agriculture. Months of dryness caused by the La Nina weather pattern have parched crops in South America. Palm-oil stockpiles may drop to “healthy levels” from April as shipments from Malaysia rose on growing production after the seasonally low-output months of January and February, Lee said. Global vegetable oil demand may grow by 3% to 5% in 2012, said Lee, who's also executive director at IOI Corp, Malaysia's second largest listed producer.
“If we can reduce the stocks to around 1.7 million tonnes, it will be a very positive development,” said Lee, who forecast an increase in shipments of 5% to 10%. Growing demand from China, India and African countries would offset slowing imports in European countries caused by a reduction in biofuel usage and sustainability issues, he said.
Malaysian output would show “moderate” growth of less than 5% in 2012 after a “significant” increase last year, Lee said.
Output climbed 11% to 18.9 million tonnes in 2011 from 16.99 million tonnes a year earlier, according to data from the Malaysian Palm Oil Board. Production may be 19 million tonnes this year as more plantations mature, Plantation Industries and Commodities Minister Bernard Dompoksaid on Jan 19.
Malaysia was promoting new uses for the tropical oil, which included anti-oxidants such as tocotrienols and phenolics, as well as furniture made from the wood from the oil palm's trunk, said Lee.
Indonesia, the biggest producer, cut the maximum tax rate on crude palm oil exports last October and imposed lower duties on processed products to help the local refining industry.
If the export duty in Indonesia was helping its mid-tier refineries, one strategy for Malaysia was to go further up the so-called value chain, said Lee. “Those are very competitive” products, he said, referring to output such as oleochemicals, food esters and specialty chemicals and fats. - Bloomberg
Tag :
Batu Kawan,
BLD Plantation,
IOI,
Jaya Tiasa,
Kim Loong,
KLK,
Kwantas,
Sector News,
Ta Ann,
TSH
5利好支撐‧種植業評級上修
（吉隆坡3日訊）今年種植領域獲得5大利好因素支撐，使分析員將種植領域評級調升至中和，預料2012年原棕油平均價格維持每公吨3千令吉水平，惟去年2月創下的3千800令吉高峰，將難以突破。肯納格研究指出，上述5大利好包括棕油產量看跌、亞洲原棕油市場需求穩健、原棕油庫存及使用比例緊縮、大豆油價格高企，以及拉尼娜氣候可能延長等，將為2012年的原棕油價格提供支撐。
去年全球原棕油產量增9.4% 今年料放緩至4.2%
2011年全球原棕油產量按年強勁成長9.4%之後，預料2012年成長率將放緩至4.2%，這主要是經過一年強勁成長，油棕樹在接下來的一年裡需要“休息”，料使今年產量成長放緩到210萬公吨至5千230萬公吨。世界食油雜誌預測，今年印尼原棕油產量按年成長增至6.3%，反觀大馬則僅1.5%。
肯納格指出，過去10個月裡（2011年3月至2011年12月），大馬的鮮果串回酬复甦出奇強勁，使原棕油產量增長介於2%至26%之間。過去10年紀錄顯示，原棕油按年成長僅能持續7至13個月。因此，假設這次的成長週期達到最長的13個月，預料原棕油產量下跌週期將從2012年4月開始。估計2011年10月至2012年9月間的全球原棕油消費量按年增長6.3%或300萬公吨，至5千120萬公吨水平。若氣候沒有出現明顯變化，5千150萬公吨的原棕油供應將足夠應付需求。
2012年的原棕油價格料可在2千800令吉水平獲支撐，不過，將不太可能突破2011年2月份創下的3千800令吉高峰。2011年，印尼原棕油消費量達到609萬公吨，超越中國的606萬公吨。預料此趨勢將延續至2012年，因印尼原棕油按年使用量料可成長12.5%，為亞洲之最，比較中國市場成長為9.3%，以及印度成長則為4.4%。
這主要是印尼2億4千萬人口對食品需求有增無減，以及主要是供出口的生物柴油生產的需求。
在2011年10月至2012年9月期間，預料全球的原棕油庫存對使用比例將下跌15.7%，主要是6.3%的需求成長，超越供應成長4.2%。世界食油雜誌資料顯示，原棕油的2011年第三季及2011年第四季的消費量分別達到1千270萬公吨及1千280萬公吨，按年成長率為8.2%，特別是大豆油及菜子油的供應短缺所致。阿根廷及巴西氣候亁旱，使本季的大豆收成情況不明朗，它們佔全球大豆油出口的69%，使大豆油價格獲得支撐。由於原棕油被視為大豆油替代品，一旦南美洲大豆歉收，預料原棕油的價格也會隨著走高。
今年1月的南美洲雨量已降至平均水平，並且僅有特定地區下雨。這使世界食油雜誌將阿根廷的大豆供應削減200萬公吨，至4千650萬公吨，以及巴西的供應也減少200萬公吨至7千萬公吨，它可能會在今年2月份的期刊進一步削減供應量預測，這有助間接支撐原棕油價格。拉尼娜氣候轉弱，不過，時間卻延長。美國氣象預測中心預料拉尼娜將持續至2012年春天或是2012年第二季。一旦拉尼娜氣候延長，預料過量雨水將減少大馬及印尼的鮮果串產量，從而推高原棕油價格。
森那美成首選
肯納格維持種植領域“中和”評級，在棕油價適度成長之際，看好棕油串成長表現亮眼的公司，以及業務成長主要來自非種植業務的公司。肯納格的大資本種植股首選為森那美（SIME，4197，主板貿服組），評級從“市場表現”調升至“超越市場”，目標價10令吉85仙。IOI集團（IOICORP，1961，主板種植組）則升至“市場表現”評級，目標價5令吉55仙。
中資本種植股首選為大安控股（TAANN，5012，主板工業產品組），特別是其2012年財政年的鮮果串產量成長達到30%標青表現，獲得“超越市場”評級，目標價7令吉90仙。怡保種植（IJMPLNT，2216，主板種植組）獲得“市場表現”評級，目標價3令吉25仙。吉隆坡甲洞（KLK，2445，主板種植組）則是“落後大市”評級，目標價21令吉50仙；雲頂種植（GENP，2291，主板種植組）也是落在“落後大市”評級，目標價8令吉75仙。
（星洲日報／財經Malaysia's timber industry makes a comeback
THE timber industry is making a comeback, according to a research firm.
AmResearch Sdn Bhd has initiated a coverage on the sector with an "overweight" call and noted that the sector had seen price recovery.
Quoting industry sources, AmResearch said Malaysian timber had survived the onslaught of global economic malaise, mainly due to rising demand from India and China over the past few years.
"True to available data, timber traders tell us that rising demand from India for tropical logs has hugely supported the Malaysian timber industry, as Japan continues to be in the economic doldrums.
"These sources even say that the industry owes its survival in recent years to the insatiable demand from India and China, and now Vietnam too, thereby to a certain extent supporting prices during the most recent global economic crisis," the firm said in a report released yesterday.
Based on the International Tropical Timber Organisation's (ITTO) latest data from Japan, Meranti regular log exports in Sarawak were exported at a high of US$245 (RM747.25) per cubic metre as at end-2010, up 27 per cent from the early part of the year.
The local plywood industry, meanwhile, was nearly gutted in 2009 as housing starts in Japan, the world's single largest importer of tropical plywood, plummeted 28 per cent to its lowest level in four decades, while plywood import volume fell over 20 per cent.
Of the local timber stocks, AmResearch has recommended a "buy" on Jaya Tiasa Holdings Bhd and a "hold" for TA Ann Holdings Bhd.
It rated Jaya Tiasa with a fair value of RM6 per share, based on a target price estimate of 15 times and an estimate price per share of 40 sen for the year ending 2011.
"The fair value offers a 20 per cent upside over its last traded price of RM4.98. Our stance is premised on its rapidly changing earnings profile and high-octane growth in the oil palm business."
For TA Ann, the research house puts a fair value of RM5.61 per share.
AmResearch said the two companies are reaping the fruit of their venture into oil palm about a decade ago.
"Crude palm oil is now trading at between RM3,900 and RM4,000 per tonne versus an average of RM 2,700 per tonne last year. Their rapid growth in oil palm has simply become too significant to ignore.
"For the two companies, a reclassification from the industrial products sector to plantation appears to be inevitable perhaps within the next three years. This will increase their profile among investors," it added.
Read more: Malaysia's timber industry makes a comeback http://www.btimes.com.my/Current_News/BTIMES/articles/jrtimber/Article/#ixzz1E0Vn2Lz3
AmResearch Sdn Bhd has initiated a coverage on the sector with an "overweight" call and noted that the sector had seen price recovery.
Quoting industry sources, AmResearch said Malaysian timber had survived the onslaught of global economic malaise, mainly due to rising demand from India and China over the past few years.
"True to available data, timber traders tell us that rising demand from India for tropical logs has hugely supported the Malaysian timber industry, as Japan continues to be in the economic doldrums.
"These sources even say that the industry owes its survival in recent years to the insatiable demand from India and China, and now Vietnam too, thereby to a certain extent supporting prices during the most recent global economic crisis," the firm said in a report released yesterday.
Based on the International Tropical Timber Organisation's (ITTO) latest data from Japan, Meranti regular log exports in Sarawak were exported at a high of US$245 (RM747.25) per cubic metre as at end-2010, up 27 per cent from the early part of the year.
The local plywood industry, meanwhile, was nearly gutted in 2009 as housing starts in Japan, the world's single largest importer of tropical plywood, plummeted 28 per cent to its lowest level in four decades, while plywood import volume fell over 20 per cent.
Of the local timber stocks, AmResearch has recommended a "buy" on Jaya Tiasa Holdings Bhd and a "hold" for TA Ann Holdings Bhd.
It rated Jaya Tiasa with a fair value of RM6 per share, based on a target price estimate of 15 times and an estimate price per share of 40 sen for the year ending 2011.
"The fair value offers a 20 per cent upside over its last traded price of RM4.98. Our stance is premised on its rapidly changing earnings profile and high-octane growth in the oil palm business."
For TA Ann, the research house puts a fair value of RM5.61 per share.
AmResearch said the two companies are reaping the fruit of their venture into oil palm about a decade ago.
"Crude palm oil is now trading at between RM3,900 and RM4,000 per tonne versus an average of RM 2,700 per tonne last year. Their rapid growth in oil palm has simply become too significant to ignore.
"For the two companies, a reclassification from the industrial products sector to plantation appears to be inevitable perhaps within the next three years. This will increase their profile among investors," it added.
Read more: Malaysia's timber industry makes a comeback http://www.btimes.com.my/Current_News/BTIMES/articles/jrtimber/Article/#ixzz1E0Vn2Lz3
Tag :
Jaya Tiasa,
Ta Ann
价格复苏前景看俏 木材领域获增持评级
2011/02/15 11:16:07 AM
●南洋商报 报道：沈素蕾
（吉隆坡14日讯）木材价复苏，加上本地两大挂牌木材公司随业务架构转型而业绩前景良好，木材领域进而备受看好，获分析员给予“增持”评级。
据大马研究分析员，受全球经济打击之后，木材领域如今已处在复苏阶段。
其中，胶合板（plywood）价格近几周已从2009年的每立方米350美元，回弹至485美元，梅兰蒂木（Meranti）一般原木价格则从每立方米120至130美元，增加至每立方米290美元。
常成大安业务转型
在木材业好转之际，常成控股（JTiasa，4383，主板工业产品股）和大安（TaAnn，5012，主板工业产品股）的业务架构也开始转型，因两者的种植业务将带来主要的业绩贡献。
他说：“这两家公司在大约10年前所进军的油棕业，已开始取得成果。”
●南洋商报 报道：沈素蕾
（吉隆坡14日讯）木材价复苏，加上本地两大挂牌木材公司随业务架构转型而业绩前景良好，木材领域进而备受看好，获分析员给予“增持”评级。
据大马研究分析员，受全球经济打击之后，木材领域如今已处在复苏阶段。
其中，胶合板（plywood）价格近几周已从2009年的每立方米350美元，回弹至485美元，梅兰蒂木（Meranti）一般原木价格则从每立方米120至130美元，增加至每立方米290美元。
常成大安业务转型
在木材业好转之际，常成控股（JTiasa，4383，主板工业产品股）和大安（TaAnn，5012，主板工业产品股）的业务架构也开始转型，因两者的种植业务将带来主要的业绩贡献。
他说：“这两家公司在大约10年前所进军的油棕业，已开始取得成果。”
Tag :
Jaya Tiasa,
Ta Ann
Tight log supply situation in S’wak to persist in 2011
Posted on January 1, 2011, Saturday
KUCHING: The tight log supply situation in Sarawak is likely to continue for a few more months this year due to seasonal factors before log production starts to normalise. The price of tropical logs had performed very well in 2010, partly due to this situation.
Nevertheless, tropical log prices would remain firm even when log production starts to pick up due to the huge and robust demand from India and China, said RHB Research Institute Sdn Bhd (RHB Research) in its recent research report.
Other than that, another year extension of the 50 per cent log export quota was likely to be granted to the timber players once the current extension expires in the first half of this year, as the Sarawak Forestry Department continued to remain supportive of the timber industry, in view of the current low utilisation rate of the plywood division for most timber players.
Prices for tropical plywood had also performed quite well in 2010, rising by between eight per cent and 14 per cent year-to-date on the back of steady import demand from Japan which was up by 12.1 per cent year-on-year (y-o-y) for the January-October 2010 period.
Going into 2011, selling prices and demand for plywood were expected to remain firm, underpinned by improving housing starts in Japan. Hence, industry capacity utilisation rates were likely to remain stable at between 60 per cent and 70 per cent, as timber players were not eager to increase their plywood production volume until demand is on a more stable track.
RHB Research shared its view that the improved and stable outlook for plywood would keep the plywood division of timber players at a profitable level in 2011 unlike previous years, when losses were incurred due to stagnating plywood prices.
To recap, the latest October 2010 Japan housing starts growth of 6.4 per cent y-o-y was the fifth consecutive y-o-y rise following the previous 17.7 per cent and 20.4 per cent y-o-y growth recorded in September and August respectively. This was supported by the number of building permits issued, which was 3.4 per cent higher y-o-y in October 2010.
Going forward, RHB Research expected further improvement in Japan’s housing would start to boost the overall demand and sentiment for the timber sector. However, timber players had to increase selling prices in order to compensate for foreign exchange losses.
RHB Research’s economic team pointed out that the ringgit vs US dollar exchange rate would likely strengthen between RM3 and RM3.10 this year.
While the strengthening of the ringgit would affect timber companies’ US-based revenues, it believed the current rising price trend for both logs and plywood would partially compensate for the exchange rate movement.
For 2011 and 2012, the team projected log and plywood prices to increase between three and six per cent per annum in US dollar terms, but to increase by only between two per cent and five per cent per annum in ringgit terms.
Based on the analysis done by the team, WTK Holdings Bhd was the most sensitive to US dollar price movements, where every five sen/US dollar change in exchange would change earnings by between 11 per cent and 13 per cent, while Evergreen Fibreboard Bhd was the least sensitive, where every five sen/US dollar change would only change earnings by between one per cent and two per cent.
The research house remained positive on Ta Ann Holdings Bhd and Jaya Tiasa Holdings Bhd, as both companies had significant oil palm plantations that were similar to mid sized plantation companies.
The rising crude palm oil price trend, coming in at a time when fresh fruit bunch production for both companies were set to rise significantly over the next few years would provide a major boost and change to their earnings profile from 2011 onwards.
Among the risks stated on the report were the lower than expected improvement in Japan’s housing starts and the price discounting from neighbouring countries with lower cost of production, resulting in lower exports from Malaysia to its major export markets.
KUCHING: The tight log supply situation in Sarawak is likely to continue for a few more months this year due to seasonal factors before log production starts to normalise. The price of tropical logs had performed very well in 2010, partly due to this situation.
Nevertheless, tropical log prices would remain firm even when log production starts to pick up due to the huge and robust demand from India and China, said RHB Research Institute Sdn Bhd (RHB Research) in its recent research report.
Other than that, another year extension of the 50 per cent log export quota was likely to be granted to the timber players once the current extension expires in the first half of this year, as the Sarawak Forestry Department continued to remain supportive of the timber industry, in view of the current low utilisation rate of the plywood division for most timber players.
Prices for tropical plywood had also performed quite well in 2010, rising by between eight per cent and 14 per cent year-to-date on the back of steady import demand from Japan which was up by 12.1 per cent year-on-year (y-o-y) for the January-October 2010 period.
Going into 2011, selling prices and demand for plywood were expected to remain firm, underpinned by improving housing starts in Japan. Hence, industry capacity utilisation rates were likely to remain stable at between 60 per cent and 70 per cent, as timber players were not eager to increase their plywood production volume until demand is on a more stable track.
RHB Research shared its view that the improved and stable outlook for plywood would keep the plywood division of timber players at a profitable level in 2011 unlike previous years, when losses were incurred due to stagnating plywood prices.
To recap, the latest October 2010 Japan housing starts growth of 6.4 per cent y-o-y was the fifth consecutive y-o-y rise following the previous 17.7 per cent and 20.4 per cent y-o-y growth recorded in September and August respectively. This was supported by the number of building permits issued, which was 3.4 per cent higher y-o-y in October 2010.
Going forward, RHB Research expected further improvement in Japan’s housing would start to boost the overall demand and sentiment for the timber sector. However, timber players had to increase selling prices in order to compensate for foreign exchange losses.
RHB Research’s economic team pointed out that the ringgit vs US dollar exchange rate would likely strengthen between RM3 and RM3.10 this year.
While the strengthening of the ringgit would affect timber companies’ US-based revenues, it believed the current rising price trend for both logs and plywood would partially compensate for the exchange rate movement.
For 2011 and 2012, the team projected log and plywood prices to increase between three and six per cent per annum in US dollar terms, but to increase by only between two per cent and five per cent per annum in ringgit terms.
Based on the analysis done by the team, WTK Holdings Bhd was the most sensitive to US dollar price movements, where every five sen/US dollar change in exchange would change earnings by between 11 per cent and 13 per cent, while Evergreen Fibreboard Bhd was the least sensitive, where every five sen/US dollar change would only change earnings by between one per cent and two per cent.
The research house remained positive on Ta Ann Holdings Bhd and Jaya Tiasa Holdings Bhd, as both companies had significant oil palm plantations that were similar to mid sized plantation companies.
The rising crude palm oil price trend, coming in at a time when fresh fruit bunch production for both companies were set to rise significantly over the next few years would provide a major boost and change to their earnings profile from 2011 onwards.
Among the risks stated on the report were the lower than expected improvement in Japan’s housing starts and the price discounting from neighbouring countries with lower cost of production, resulting in lower exports from Malaysia to its major export markets.
Tag :
Jaya Tiasa,
Ta Ann
Accumulate Jaya Tiasa and TaAnn - Long term
Both Jaya Tiasa and Ta Ann are not only in Timber business but also heavily invested on Palm Oil business since 2003. It is time to accumulate due to slowdown of Japan plywood market, the long-term outlook of the timber industry is expected to remain promising in view of the limited log supply and sustained demand for timber products from emerging economies such as China and India and Russia Government plan to increase in export tax of softwood.
Current share price of the both company have not fully value their palm oil business which will start to contribute significant profit on next 3-5yrs.
Buy Jaya Tiasa around below 3.30 and TaAnn below RM6.00
日本進口夾板跌9年低點 木材股展望續蒙塵-4th Nov 2007
※報導 : 李駿宏
（吉隆坡3日訊）根據日本木材報告顯示，日本8月份進口的夾板下滑到9年來的最低點－26萬3000立方米，按年下滑42.7%，分析員因此謹慎看待本地木材股的前景，因該領域的前景繼續蒙塵。
從年初迄今，日本的總夾板進口按年下滑9.6%，至290萬立方米，這符合日本房屋開工率下滑的狀況。此外，10月的進口混凝土板及地板夾板價格，分別按年下滑33%和6%，至每立方米444美元和656美元。
分析員指出，日本夾板需求的滑落幅度，比他們預期中更大。根據消息來源透露，日本的庫存還能夠維持2到3個月，因此，日本的進口商並不願意增加購買價格。
這種狀況代表日本對夾板的需求，僅可能從2008年第一季開始才會復甦。在這種情況下，拉昔胡申研究分析員表示，他們將調低對本地木材公司未來2到3年的夾板銷售額，調幅介于10%到35%。
分析員指出，他們已將大安控股（TAANN，5012，主板工業股）07到09財政年的淨利預測，下調20%，以反映夾板銷售額下滑20到35%，至18萬2000到28萬4000立方米的預測。在這種情況下，他們也將該股的合理價從8.88令吉，向下調整至6.50令吉。同時，該股的投資建議則從「與大市同步」，下調至「跑輸大市」。
至于黃傳寬控股（WTK，4243，主板工業股），分析員將該公司07到09財政年的淨利預測，下調13到20%，這也同樣是反映其銷售額滑落20到30%，至15萬5000到21萬8000立方米的預測。該股的合理價格從2.98令吉，調降至2.40令吉，但維持「股價表現與大市同步」的評級。
另外，拉昔胡申研究分析員也降低常成控股（JTIASA，4383，主板工業股）08到10財政年的淨利預期，調降幅度介于4到17%，以反映該公司銷售額將下滑5到10%，至31萬5000到34萬8000立方米的預測。該分析員表示，常成控股淨利預測調整幅度較小，主要是因為該公司出口到日本的數量，僅佔公司總銷售額20%比重，而上述兩家公司的比率高達80到90%。
無論如何，由于調降銷售額，因此他也將常成控股的合理價格，從4.61令吉調降至3.47令吉。同時，將投資建議降級為「跑輸大市」。整體來說，拉昔胡申研究將對木材領域的投資建議，從「中和」調低至「減持」。
Current share price of the both company have not fully value their palm oil business which will start to contribute significant profit on next 3-5yrs.
Buy Jaya Tiasa around below 3.30 and TaAnn below RM6.00
日本進口夾板跌9年低點 木材股展望續蒙塵-4th Nov 2007
※報導 : 李駿宏
（吉隆坡3日訊）根據日本木材報告顯示，日本8月份進口的夾板下滑到9年來的最低點－26萬3000立方米，按年下滑42.7%，分析員因此謹慎看待本地木材股的前景，因該領域的前景繼續蒙塵。
從年初迄今，日本的總夾板進口按年下滑9.6%，至290萬立方米，這符合日本房屋開工率下滑的狀況。此外，10月的進口混凝土板及地板夾板價格，分別按年下滑33%和6%，至每立方米444美元和656美元。
分析員指出，日本夾板需求的滑落幅度，比他們預期中更大。根據消息來源透露，日本的庫存還能夠維持2到3個月，因此，日本的進口商並不願意增加購買價格。
這種狀況代表日本對夾板的需求，僅可能從2008年第一季開始才會復甦。在這種情況下，拉昔胡申研究分析員表示，他們將調低對本地木材公司未來2到3年的夾板銷售額，調幅介于10%到35%。
分析員指出，他們已將大安控股（TAANN，5012，主板工業股）07到09財政年的淨利預測，下調20%，以反映夾板銷售額下滑20到35%，至18萬2000到28萬4000立方米的預測。在這種情況下，他們也將該股的合理價從8.88令吉，向下調整至6.50令吉。同時，該股的投資建議則從「與大市同步」，下調至「跑輸大市」。
至于黃傳寬控股（WTK，4243，主板工業股），分析員將該公司07到09財政年的淨利預測，下調13到20%，這也同樣是反映其銷售額滑落20到30%，至15萬5000到21萬8000立方米的預測。該股的合理價格從2.98令吉，調降至2.40令吉，但維持「股價表現與大市同步」的評級。
另外，拉昔胡申研究分析員也降低常成控股（JTIASA，4383，主板工業股）08到10財政年的淨利預期，調降幅度介于4到17%，以反映該公司銷售額將下滑5到10%，至31萬5000到34萬8000立方米的預測。該分析員表示，常成控股淨利預測調整幅度較小，主要是因為該公司出口到日本的數量，僅佔公司總銷售額20%比重，而上述兩家公司的比率高達80到90%。
無論如何，由于調降銷售額，因此他也將常成控股的合理價格，從4.61令吉調降至3.47令吉。同時，將投資建議降級為「跑輸大市」。整體來說，拉昔胡申研究將對木材領域的投資建議，從「中和」調低至「減持」。
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Jaya Tiasa,
Ta Ann
