KUCHING: Ta Ann Holdings Bhd’s (Ta Ann) production of fresh fruit bunches (FFB) of palm oil is poised to grow given the company’s young weighted average palm oil tree age profile of approximately seven years.
Affin Hwang Investment Bank Bhd (Affin Hwang) yobserved that Ta Ann’s FFB production in the first five months of this year rose by 5.7 per cent year-on-year (y-o-y) to 208,565 metric tonne (MT).
For the same period, the company’s crude palm oil (CPO) production also rose by 27.3 per cent y-o-y to 55,496 MT.
Affin Hwang expects Ta Ann’s matured palm oil plantation area to increase to 35,345 hectares (ha) in 2015 and 37,267 ha in 2016 from 30,355 ha as at end of 2014.
The research firm observed Ta Ann has planted about 39,921 ha of its total plantable area of 42,914 ha of plantation land bank as at March this year.
It expects Ta Ann group’s plantation division to plant fully its remaining plantable land bank by the end of this year.
Additionally, the research firm noted Ta Ann is expanding its palm-oil estates.
Ta Ann’s wholly-owned subsidiary Ta Ann Plantation Sdn Bhd has a joint venture with Pelita Holdings Sdn Bhd (Pelita Holdings) for palm-oil development projects in partnership with Native Customary Rights (NCR) land owners.
Affin Hwang said the move is in line with the group’s mission to find areas within Sarawak to increase its palm oil estates.
As for Ta Ann’s timber division, the prospects are dependent on market demand from main export markets.
“Demand for tropical logs remains strong especially from India as the country need timber products for building and renovation.
With tight global supply for logs, Affin Hwang noted the scenario has helped to keep Ta Ann’s average selling price (ASP) to be firm.
Nonetheless, the research firm observed Ta Ann’s ASP for plywood has moderated as a result of softening demand for plywood from Japan.
On another note, Affin Hwang said timber companies like Ta Ann have undertaken research projects to develop higher yielding tree materials to help sustain timber supply over the long term.