MARKET DEVELOPMENT
Plantations to Continue Driving Ta Ann’s Medium Term
Plantations to Continue Driving Ta Ann’s Medium Term
26/02/2014 (Borneo Post) - Ta Ann Holdings Bhd’s (Ta Ann) medium term prospects will continue to be driven by its plantation division amid better crude palm oil (CPO) prices while its timber operations is expected to remain subdued.
Analysts believe the company’s growth remain intact supported by its palm oil business which could register better earnings in coming quarters.
The research arm of Maybank Investment Bank Bhd (Maybank Research) in a report said Ta Ann’s bullish prospects in the medium term remain intact with oil palm estates’ young age profile of 6.5 years driving robust output of three-year compound annual growth rate (CAGR) of 16 per cent.
“(Besides that), the continuous effort to reduce plywood losses from Tasmania would help to improve its financial performance,” the research firm said.
Affin Investment Bank Bhd (Affin Research) in another report said Ta Ann’s oil palm division contributed 56 per cent or RM64 million to the company’s profit before tax in financial year 2013 (FY13).
“Going forward, we expect the oil palm division to contribute 75 per cent to the group profit before tax in FY14,” it said.
Affin Research observed that Ta Ann’s second mill in Igan was completed in December last year and is currently processing the fresh fruit bunches (FFB) harvested from estates in the Igan area.
This situation will help to lower FFB production cost through transport cost savings.
However, Affin Research noted its profit before tax (PBT) margin declined to 26 per cent in 2013 from 33 per cent in 2012 due to lower average selling price for CPO in 2013.
The research said this was despite an increase in total planted area to 37,541 hectares, an increase of six per cent year-on-year (y-o-y) and more matured acreage of 28,610 hectares, nine per cent higher y-o-y in 2013.
Meanwhile, Kenanga Research analyst Alan Lim Seong Chun in another note said the company expects FY14 to be a better year than 2013.
“We concur with this as we think the plantation division should be a direct beneficiary of better CPO prices, currently above RM2,700 per metric tonne, while its timber division should be supported by expected better prices for export logs and plywood,” he said.
Due to better outlook for the company, Lim forecasted its core net earnings to grow by 74 per cent to RM120 million in FY14.
In the meantime, Ta Ann which reported its financial results for the fourth quarter of 2013 (4Q13) on February 24 witnessed its net profit soared to RM31 million from RM2.25 million in 4Q12.
The company in a filing to Bursa Malaysia said for FY13 its earnings rose 60 per cent to RM92 million from RM57 million in FY12.
However, its turnover for FY13 declined two per cent to RM774 million due to weaker average selling price for CPO and plywood by 21 per cent and four per cent respectively.
Meanwhile AmResearch Sdn Bhd (AmResearch) observed that Ta Ann still has about 7,100 hectares of plantable landbank with 1,600 hectares have been cleared to sustain its plantation business.
Generally, AmResearch is neutral on its prospects as it noted that the company’s estate expansion would be a challenge unless it could develop land which is in compliance with Wilmar’s environmental protection policy or secure contracts with less stringent refineries.
Analysts believe the company’s growth remain intact supported by its palm oil business which could register better earnings in coming quarters.
The research arm of Maybank Investment Bank Bhd (Maybank Research) in a report said Ta Ann’s bullish prospects in the medium term remain intact with oil palm estates’ young age profile of 6.5 years driving robust output of three-year compound annual growth rate (CAGR) of 16 per cent.
“(Besides that), the continuous effort to reduce plywood losses from Tasmania would help to improve its financial performance,” the research firm said.
Affin Investment Bank Bhd (Affin Research) in another report said Ta Ann’s oil palm division contributed 56 per cent or RM64 million to the company’s profit before tax in financial year 2013 (FY13).
“Going forward, we expect the oil palm division to contribute 75 per cent to the group profit before tax in FY14,” it said.
Affin Research observed that Ta Ann’s second mill in Igan was completed in December last year and is currently processing the fresh fruit bunches (FFB) harvested from estates in the Igan area.
This situation will help to lower FFB production cost through transport cost savings.
However, Affin Research noted its profit before tax (PBT) margin declined to 26 per cent in 2013 from 33 per cent in 2012 due to lower average selling price for CPO in 2013.
The research said this was despite an increase in total planted area to 37,541 hectares, an increase of six per cent year-on-year (y-o-y) and more matured acreage of 28,610 hectares, nine per cent higher y-o-y in 2013.
Meanwhile, Kenanga Research analyst Alan Lim Seong Chun in another note said the company expects FY14 to be a better year than 2013.
“We concur with this as we think the plantation division should be a direct beneficiary of better CPO prices, currently above RM2,700 per metric tonne, while its timber division should be supported by expected better prices for export logs and plywood,” he said.
Due to better outlook for the company, Lim forecasted its core net earnings to grow by 74 per cent to RM120 million in FY14.
In the meantime, Ta Ann which reported its financial results for the fourth quarter of 2013 (4Q13) on February 24 witnessed its net profit soared to RM31 million from RM2.25 million in 4Q12.
The company in a filing to Bursa Malaysia said for FY13 its earnings rose 60 per cent to RM92 million from RM57 million in FY12.
However, its turnover for FY13 declined two per cent to RM774 million due to weaker average selling price for CPO and plywood by 21 per cent and four per cent respectively.
Meanwhile AmResearch Sdn Bhd (AmResearch) observed that Ta Ann still has about 7,100 hectares of plantable landbank with 1,600 hectares have been cleared to sustain its plantation business.
Generally, AmResearch is neutral on its prospects as it noted that the company’s estate expansion would be a challenge unless it could develop land which is in compliance with Wilmar’s environmental protection policy or secure contracts with less stringent refineries.