TSH expects to see increase in its FY13 earnings
Posted on July 19, 2012, Thursday
KUCHING: TSH Resources Bhd (TSH) is expected to see its financial year 2013 (FY13) earnings to jump 25.4 per cent year-on-year (y-o-y) buoyed by firmer prices and positive fresh fruit bunches (FFB) production growth.
Based a research report by OSK Research Sdn Bhd (OSK Research), TSH’s rising share of production from its Kalimantan operations would boost crude palm oil (CPO) production.
The research house high lighted that TSH had planted over 21,800 hectares of oil palm since 2006 and that 75 per cent of its trees were still below peak production.
This was noted to be the fourth most favorable tree age profile among players under its coverage.
OSK Research believed that there was a possibility of El Nino occurring in the fourth quarter of 2012 and the first quarter of 2013 was high and that this could bring drought to the region.
However, the organic growth from the company’s young trees would be sufficient to buffer it against a hard landing in production.
“We upgraded TSH’s financial year 2013 (FY13) estimated earnings to RM157.1 million, up 8.4 per cent from our previous forecast for RM145 million.
“This followed an upgrade on our 2013 average CPO price assumption to RM3,500 per tonne, which triggered a round of upward earnings revision across our plantation universe for 2-13,” said the analyst from OSK Research.
The research firm valued pegged a fair value of RM3.00 per share for TSH based on 15 times financial year 2013 price earnings ratio and a RM0.16 per share value for its 10,000 hectare of rubber areas, on which 2,000 hectare is planted.
It added that TSH’s stock price was ‘very interesting’ as the company had one of the youngest tree age profiles and stronger production growth prospects among other plantation companies.