KUCHING: After recent talk with Jaya Tiasa Bhd (Jaya Tiasa) management, analysts were positive after incorporating higher plywood sales and average selling prices (ASPs) offset by lower log ASP and production levels.
According to Affin Hwang Investment Bank Bhd’s research arm (Affin Hwang Research), since late-2015, the escalating tropical log costs and depreciation of the INR against the dollar has pushed a major buyer – India, to source for lower-priced logs.
“We cut our average log-price assumptions for Jaya Tiasa by about two to eight per cent for FY16-18E to US$215-220 per cubic meter (m3) to reflect lower market prices. On the other hand, we raise our plywood-price assumption by 14-16 per cent for FY16-18E to US$510-525/m3.
“We believe Jaya Tiasa’s plywood prices did not decline in tandem mainly due to its diversified end markets for plywood,” noted the research house.
Jaya Tiasa’s total log production for 8MFY16 declined by 21.4 per cent yoy to 506,557m3, due to a labour shortage after the termination of its main contractor for logging activities since November 2014 and more stringent environmental safeguards.
Jaya Tiasa’s FFB and CPO production are likely to keep rising as more oil palm estates mature.
This coupled with higher CPO average selling price likely to help boost earnings from the plantation side.