MARKET DEVELOPMENT
‘Ta Ann’s CPO Sales Not Affected by Wilmar Policy’
‘Ta Ann’s CPO Sales Not Affected by Wilmar Policy’
25/02/2014 (Borneo Post) - Ta Ann Holdings Bhd’s (Ta Ann) crude palm oil (CPO) sales will not be affected by Wilmar International Ltd’s (Wilmar) new sourcing policy, according to the research arm of CIMB Investment Bank Bhd (CIMB Research).
The research arm had gathered from Ta Ann that it sells 100 per cent of its CPO to Wilmar’s refinery in Sarawak and that its palm oil sales to Wilmar have not been affected by recent events.
“It expects its sales to Wilmar to be unaffected even after the new sourcing policy is enforced on January 1, 2016.
“This is because the new policy will not affect planters that have cultivated forest and peat land before December 31, 2015,” CIMB Research explained.
It added that Ta Ann plans to plant its remaining peat land by end-December 2014 following this development. The research arm noted that Ta Ann’s plans to comply with Wilmar’s sourcing policy are positive but it may have to review its plans to develop the 33,000 hectares (ha) of native customary rights (NCR) land that it is negotiating for.
“In an earlier note on the sector, we said that Ta Ann may be affected by Wilmar’s new sourcing policy. This was on the assumption that it will carry on with the development of this land, the status of which may go against Wilmar’s policy,” it explained.
However, CIMB Research highlighted that Ta Ann had revealed that it is still deliberating the options for its NCR land. Also, out of its 27,000 ha of unplanted landbank in Sarawak (excluding NCR), only 7,000 ha is suitable for oil palm planting in the near term, it added.
“We also understand that only 1,500 ha of its landbank is peat land and it plans to fully plant it by end-14,” it reiterated.
In a press statement to Bursa Malaysia yesterday, Ta Ann announced that its revenue and net profit for the fourth quarter of the financial period ended Dec 31, 2013 was at RM207.14 million and RM31.98 million respectively.
Factors contributing to the performance for the quarter under review included the sales volume of plywood products and oil palm fresh fruit bunches (FFB), which were 12 per cent and two per cent lower, while export logs and crude palm oil (CPO) achieved higher sales volume of six per cent and 13 per cent respectively.
In addition, average products selling prices were generally better, particularly for FFB and export logs which recorded 21 per cent and 14 per cent higher prices respectively.
Other factors included a review of impairment of property, plant and machinery and income tax expense conducted by the Australian subsidiary Ta Ann Tasmania Pty Ltd (Ta Ann Tasmania), which concluded that the the impairment and income tax provisions were not required for the year 2013.
“Reversal of the provisions for impairment and income tax expense made on receipt of the first tranche payment of compensation in the second quarter, reduced the expenses of the Group by RM31 million and RM9.52 million respectively,” Ta Ann explained in the statement.
Lastly, an inventory write down/ off of RM21 million was made in the quarter under review.
In regards to Ta Ann’s full year revenue and earnings for 2013, it totaled RM774.17 million and RM91.46 million, compared to RM789.94 million RM51.33 million respectively for 2012.
The performance for the full year 2013 was a result of among others, the sales volume of CPO increasing by 17 per cent, though sales volume change for other products were not significant.
In addition, export log average selling price increased by 16% but average selling price of FFB and CPO dropped by 19 per cent and 18 per cent respectively.
Other factors included the first tranche compensation payment of A$20.3 million net of goods and services (GST) received by Ta Ann Tasmania from the Australian Government for wood supply entitlement returned to them increased the income of the Group.
The inventory write down/ off of RM21 million in year 2013 also affected Ta Ann’s performance for the full year.
Ta Ann foresees that the year 2014 is expected to be a better year than 2013. It noted that the Group’s timber sector performance will be influenced to a great extent, by the economy of the main log buyer country, India and plywood market in Japan.
“The general log supply shortage in the market is likely to sustain the log demand and price. Plywood demand is expected to pick up as preparation and infrastructure/ building construction for Tokyo Olympics 2020 are gearing up,” it projected.
For oil palm sector, the Group’s oil palm estates are anticipating higher production from the growing mature palms. The sector outlook for 2014 is likely to be positive with the upward trend of CPO price in the near term.
“The Group shall continue to focus on cost management and higher operational efficiency and apply the appropriate market strategy to raise competitive advantage,” it added.
Barring unforeseen circumstances, Ta Ann concluded that the Board of Directors expects higher productivity for both timber and palm oil sectors in the year 2014.
The research arm had gathered from Ta Ann that it sells 100 per cent of its CPO to Wilmar’s refinery in Sarawak and that its palm oil sales to Wilmar have not been affected by recent events.
“It expects its sales to Wilmar to be unaffected even after the new sourcing policy is enforced on January 1, 2016.
“This is because the new policy will not affect planters that have cultivated forest and peat land before December 31, 2015,” CIMB Research explained.
It added that Ta Ann plans to plant its remaining peat land by end-December 2014 following this development. The research arm noted that Ta Ann’s plans to comply with Wilmar’s sourcing policy are positive but it may have to review its plans to develop the 33,000 hectares (ha) of native customary rights (NCR) land that it is negotiating for.
“In an earlier note on the sector, we said that Ta Ann may be affected by Wilmar’s new sourcing policy. This was on the assumption that it will carry on with the development of this land, the status of which may go against Wilmar’s policy,” it explained.
However, CIMB Research highlighted that Ta Ann had revealed that it is still deliberating the options for its NCR land. Also, out of its 27,000 ha of unplanted landbank in Sarawak (excluding NCR), only 7,000 ha is suitable for oil palm planting in the near term, it added.
“We also understand that only 1,500 ha of its landbank is peat land and it plans to fully plant it by end-14,” it reiterated.
In a press statement to Bursa Malaysia yesterday, Ta Ann announced that its revenue and net profit for the fourth quarter of the financial period ended Dec 31, 2013 was at RM207.14 million and RM31.98 million respectively.
Factors contributing to the performance for the quarter under review included the sales volume of plywood products and oil palm fresh fruit bunches (FFB), which were 12 per cent and two per cent lower, while export logs and crude palm oil (CPO) achieved higher sales volume of six per cent and 13 per cent respectively.
In addition, average products selling prices were generally better, particularly for FFB and export logs which recorded 21 per cent and 14 per cent higher prices respectively.
Other factors included a review of impairment of property, plant and machinery and income tax expense conducted by the Australian subsidiary Ta Ann Tasmania Pty Ltd (Ta Ann Tasmania), which concluded that the the impairment and income tax provisions were not required for the year 2013.
“Reversal of the provisions for impairment and income tax expense made on receipt of the first tranche payment of compensation in the second quarter, reduced the expenses of the Group by RM31 million and RM9.52 million respectively,” Ta Ann explained in the statement.
Lastly, an inventory write down/ off of RM21 million was made in the quarter under review.
In regards to Ta Ann’s full year revenue and earnings for 2013, it totaled RM774.17 million and RM91.46 million, compared to RM789.94 million RM51.33 million respectively for 2012.
The performance for the full year 2013 was a result of among others, the sales volume of CPO increasing by 17 per cent, though sales volume change for other products were not significant.
In addition, export log average selling price increased by 16% but average selling price of FFB and CPO dropped by 19 per cent and 18 per cent respectively.
Other factors included the first tranche compensation payment of A$20.3 million net of goods and services (GST) received by Ta Ann Tasmania from the Australian Government for wood supply entitlement returned to them increased the income of the Group.
The inventory write down/ off of RM21 million in year 2013 also affected Ta Ann’s performance for the full year.
Ta Ann foresees that the year 2014 is expected to be a better year than 2013. It noted that the Group’s timber sector performance will be influenced to a great extent, by the economy of the main log buyer country, India and plywood market in Japan.
“The general log supply shortage in the market is likely to sustain the log demand and price. Plywood demand is expected to pick up as preparation and infrastructure/ building construction for Tokyo Olympics 2020 are gearing up,” it projected.
For oil palm sector, the Group’s oil palm estates are anticipating higher production from the growing mature palms. The sector outlook for 2014 is likely to be positive with the upward trend of CPO price in the near term.
“The Group shall continue to focus on cost management and higher operational efficiency and apply the appropriate market strategy to raise competitive advantage,” it added.
Barring unforeseen circumstances, Ta Ann concluded that the Board of Directors expects higher productivity for both timber and palm oil sectors in the year 2014.