- We maintain HOLD on Jaya Tiasa Holdings Bhd, with a fair value
of RM1.98/share (vs. RM2.69/share previously) based on an unchanged 13x PE
against a downward revised FY13F EPS of 15.2 sen – with a downside bias amid
heightened risks in both the plantation and timber sectors.
- Jaya Tiasa reported 1QFY13F earnings of RM14.5mil (-61% YoY;
QoQ comparisons are not available) – accounting for only 7% each of our earlier
forecast of RM202mil and consensus’ RM205mil. Though a negative growth was expected,
the extent of it was a surprise. No dividend was declared.
- The results were affected by lower selling prices for CPO
and timber products as well as much higher net operating costs, which rose by
33% YoY despite an only 11% YoY rise in revenue.
Moving forward, the company’s results are expected to be further hit by the
current depressed prices for CPO.
- As such, taking into account conditions for 1HFY12, we
have cut our FY13F average CPO price assumption to RM2,850/tonne (from
RM3,300/tonne previously), leading to a 26% downward revision in our earnings
forecast for the year. This assumes the average CPO price recovers to at least RM3,100/tonne
in 2HFY13.
- Our FY13F net profit is now at RM148mil, a 46% rise from
the annualised core earnings of RM102mil (which excludes derivatives and
futures gains, and subsidiary disposal) in FY12.
- For now, we maintain our FFB production assumption at 726,000 tonnes (+40% YoY vs. FY12F
annualised figure of 518,000 tonnes) – potentially with an upside bias.
- Jaya Tiasa’s announcements on Bursa Malaysia tell of an average
monthly production of 65,000 tonnes for the JulyOctober 2012 period vs. an
average of over 40,000 tonnes in the previous 14-month period. It the trend
continues, FFB production could touch 780,000 tonnes for FY13F – at least 7% higher
vs. our current assumption.
- The company says the prospect for the timber sector is expected
to remain positive in view of the tight log supply condition and anticipated
increase in demand for wood products when the general economic conditions
improve.
- Coming into play now are heightened risks relating not
only in timber, but also in the oil palm sector. Recovery for both may only be
realised in the latter part of FY13F.
- We maintain HOLD for now, with a downside bias, not only due
to the lack of catalysts, but also the heightened risks in both sectors.
Source: AmeSecurities
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