Jaya Tiasa Holdings Bhd (Dec 22, RM6.81)
Maintain “buy” at RM6.99 with target price of RM9.30; Jaya Tiasa recorded a 1H12 net profit of RM97.1 million (+84.8% year-on-year [y-o-y]) on a 32.2% growth in revenue of RM499.5 million. Net profit is broadly in line with our expectations, accounting for 56% and 57% of our and consensus full-year FY12 forecasts. Earnings before interest and tax (Ebit) margin improved to 29.3% (versus 20.3% from 1H11), largely underpinned by: 1) higher log average selling price (ASP) (about +21% y-o-y) coupled with increases in log production volume to 493,251m3 (about +9% y-o-y), 2) higher ASPs for fresh fruit bunch (FFB) (about +17% y-o-y) supported by growth in FFB production and sales volume by +17% y-o-y and +45% y-o-y respectively; and 3) +80% growth y-o-y in CPO sales volume coupled with higher CPO ASPs (about +23% y-o-y). We believe that the improvement in the production of logs and FFB output was a result of better weather conditions compared with 1HFY04/11.
On a sequential basis, Jaya Tiasa reported a slowdown in revenue to RM239.5 million (-7.9% quarter-on-quarter [q-o-q]; +24.6% y-o-y) and this trickled down to its bottom line to RM41.2 million (-26.4% q-o-q; +36.8% y-o-y). This is largely due to: 1) lower log ASPs (about -11% q-o-q) coupled with lower log production output to 240,252 cu m (about -5% q-o-q; +2.0% y-o-y), 2) decline in plywood ASPs (-7% q-o-q; +31.0% y-o-y); and 3) a fall in average FFB price by 10% q-o-q. We are not entirely worried of the slippage within the timber segment as we expect demand for plywood to pick up in 1QCY12 via reconstruction efforts in Japan. Nevertheless, the group’s oil palm segment remains as Jaya Tiasa’s largest earnings contributor, up to 63% of 1HFY04/12 profit before tax. No interim dividend was declared for the current quarter.
In a separate announcement, Jaya Tiasa has declared a change in financial year-end from April 30 to June 30. Therefore, the subsequent full-year results will comprise 14 months from May 1, 2011 to June 30, 2012. We will reflect the new full year FY06/12 forecast for the adjusted financial year in our next report.
We maintain our “buy” rating and an unchanged RNAV derived target price of RM9.30. At current price level, the company is trading at 10.8x CY12 PE, a 41.3% discount to its historical average PE of 18.4 times, which is highly attractive. We continue to like Jaya Tiasa for: 1) its exposure to recovering timber prices on the back of reconstruction demand from Japan as well as infrastructure demand from India and China; and 2) diversification into palm oil coupled with increasing matured acreage (about +49.0% y-o-y in FY12E). — Affin IB Research, Dec 22
This article appeared in The Edge Financial Daily, December 23, 2011.
Maintain “buy” at RM6.99 with target price of RM9.30; Jaya Tiasa recorded a 1H12 net profit of RM97.1 million (+84.8% year-on-year [y-o-y]) on a 32.2% growth in revenue of RM499.5 million. Net profit is broadly in line with our expectations, accounting for 56% and 57% of our and consensus full-year FY12 forecasts. Earnings before interest and tax (Ebit) margin improved to 29.3% (versus 20.3% from 1H11), largely underpinned by: 1) higher log average selling price (ASP) (about +21% y-o-y) coupled with increases in log production volume to 493,251m3 (about +9% y-o-y), 2) higher ASPs for fresh fruit bunch (FFB) (about +17% y-o-y) supported by growth in FFB production and sales volume by +17% y-o-y and +45% y-o-y respectively; and 3) +80% growth y-o-y in CPO sales volume coupled with higher CPO ASPs (about +23% y-o-y). We believe that the improvement in the production of logs and FFB output was a result of better weather conditions compared with 1HFY04/11.
On a sequential basis, Jaya Tiasa reported a slowdown in revenue to RM239.5 million (-7.9% quarter-on-quarter [q-o-q]; +24.6% y-o-y) and this trickled down to its bottom line to RM41.2 million (-26.4% q-o-q; +36.8% y-o-y). This is largely due to: 1) lower log ASPs (about -11% q-o-q) coupled with lower log production output to 240,252 cu m (about -5% q-o-q; +2.0% y-o-y), 2) decline in plywood ASPs (-7% q-o-q; +31.0% y-o-y); and 3) a fall in average FFB price by 10% q-o-q. We are not entirely worried of the slippage within the timber segment as we expect demand for plywood to pick up in 1QCY12 via reconstruction efforts in Japan. Nevertheless, the group’s oil palm segment remains as Jaya Tiasa’s largest earnings contributor, up to 63% of 1HFY04/12 profit before tax. No interim dividend was declared for the current quarter.
In a separate announcement, Jaya Tiasa has declared a change in financial year-end from April 30 to June 30. Therefore, the subsequent full-year results will comprise 14 months from May 1, 2011 to June 30, 2012. We will reflect the new full year FY06/12 forecast for the adjusted financial year in our next report.
We maintain our “buy” rating and an unchanged RNAV derived target price of RM9.30. At current price level, the company is trading at 10.8x CY12 PE, a 41.3% discount to its historical average PE of 18.4 times, which is highly attractive. We continue to like Jaya Tiasa for: 1) its exposure to recovering timber prices on the back of reconstruction demand from Japan as well as infrastructure demand from India and China; and 2) diversification into palm oil coupled with increasing matured acreage (about +49.0% y-o-y in FY12E). — Affin IB Research, Dec 22
This article appeared in The Edge Financial Daily, December 23, 2011.
