This is despite a decline in earnings because of a six-month delay in the EkoPaper project.

The research firm has forecast that TSH will achieve RM80 million in net profit for the financial year ending December 2007, RM100 million in 2008 and RM116 million in 2009.

"The transformation of TSH Resources from a relatively pure downstream processor into a fully integrated agro-industrialist has just begun.

"The group has started expanding both its upstream and downstream presence through new plantation acquisitions, and tie-up with TSH-Wilmar on the palm oil refinery operations," KAF-Seagroatt & Campbell said.

The research firm said maiden contribution is expected from the group's alliance with Wilmar Edible Oils from this year onwards, as the palm oil refinery and kernel crushing plant project in Sabah is already up and running..

KAF-Seagroatt & Campbell said the stock remains an under-appreciated growth story. This is evident from its lacklustre share price performance despite the strong earnings recovery and potential growth in the coming years as earnings from some of the group's recent ventures kick in.

KAF-Seagroatt & Campbell strongly reiterates its "buy" recommendation and revised the target price to RM3.60, a 120 per cent upside potential.

The report said the high percentage of immature area of 56 per cent or 11,550 ha and a relatively young oil palm age profile, an average of seven years, would ensure rising yields in the coming years.

This will reduce the group's dependence on external fresh fruit bunch (FFB) supplies for its milling operations which will allow it to realise higher margins and better earnings leverage from rising crude palm oil (CPO) prices.

The group also plans to develop between 5,000-6,000 ha of oil palm plantation a year over the next three years.