Jaya Tiasa’s 1HFY13 earnings of RM17.4m (-81.4% y-o-y) missed expectations by a mile as stronger timber products sales volume was accompanied with steep declines in realized prices. Export logs profits plunged into losses while earnings contribution from its plantation estates shrank by 62% y-o-y. We are slashing our FY13-FY14 forecasts by 15%-26%, reducing our FV to RM1.45. Maintain SELL.
Below expectations. Jaya Tiasa clocked in 2QFY13 revenue of RM286.2m (+13.5% y-o-y, +4.3% q-o-q) and earnings of RM2.9m (-95.0% y-o-y, -80.1% q-o-q). Stronger sales volume for its timber products lifted revenue but sharp declines in selling prices for both its timber and oil palm products led to the dismal quarter. Revenue for the first six months of the year was also comparatively stronger at RM560.6m (+12.5% y-o-y) but losses in its logs export division dragged down net profit to just RM17.4m (-81.4% y-o-y). Jaya Tiasa’s 1HFY13 earnings accounted for 25.0% and 15.7% of our and consensus full-year forecast respectively.
Horrendous pricing across the board. Despite 1HFY13 logs and plywood sales volume growing by 58% and 31% y-o-y respectively, an 11% plywood ASP reduction saw its wood processing profits shrinking by 18.5% y-o-y while a 16% drop in logs ASP plunged its logs profits into the red. Realized FFB and CPO prices for Jaya Tiasa in 1HFY13 also declined by 22% and 17% y-o-y, spearheading the 62.4% contraction in oil palm-related earnings contribution. While expectations are for fiscal spending in Japan to drive infrastructure expenditures in the land of the rising sun, recent prices and housing starts data are still unable to provide concrete evidence of a recovery in timber demand.
Maintain SELL. We are cutting our FY13 and FY14 earnings forecasts by 26.1% and 14.7% respectively after building in softer logs and plywood selling prices. Our assumptions are for log prices to dip by 8.1% and plywood prices to decline by 9.7% in FY13. We hence reduce our FV to RM1.45 from RM1.65 previously, based on 13.0x FY14 plantation earnings and 9.0x FY14 timber profits.
Below expectations. Jaya Tiasa clocked in 2QFY13 revenue of RM286.2m (+13.5% y-o-y, +4.3% q-o-q) and earnings of RM2.9m (-95.0% y-o-y, -80.1% q-o-q). Stronger sales volume for its timber products lifted revenue but sharp declines in selling prices for both its timber and oil palm products led to the dismal quarter. Revenue for the first six months of the year was also comparatively stronger at RM560.6m (+12.5% y-o-y) but losses in its logs export division dragged down net profit to just RM17.4m (-81.4% y-o-y). Jaya Tiasa’s 1HFY13 earnings accounted for 25.0% and 15.7% of our and consensus full-year forecast respectively.
Horrendous pricing across the board. Despite 1HFY13 logs and plywood sales volume growing by 58% and 31% y-o-y respectively, an 11% plywood ASP reduction saw its wood processing profits shrinking by 18.5% y-o-y while a 16% drop in logs ASP plunged its logs profits into the red. Realized FFB and CPO prices for Jaya Tiasa in 1HFY13 also declined by 22% and 17% y-o-y, spearheading the 62.4% contraction in oil palm-related earnings contribution. While expectations are for fiscal spending in Japan to drive infrastructure expenditures in the land of the rising sun, recent prices and housing starts data are still unable to provide concrete evidence of a recovery in timber demand.
Maintain SELL. We are cutting our FY13 and FY14 earnings forecasts by 26.1% and 14.7% respectively after building in softer logs and plywood selling prices. Our assumptions are for log prices to dip by 8.1% and plywood prices to decline by 9.7% in FY13. We hence reduce our FV to RM1.45 from RM1.65 previously, based on 13.0x FY14 plantation earnings and 9.0x FY14 timber profits.
Source: OSK
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