Sunday, March 24

Sarawak plantation, timber sectors not seriously affected by floods, says AffinHwang


KUCHING: Plantation and timber companies are to date not seriously affected by the heavy downfall over the past four days.

Many areas in Sarawak remain flooded following continuous rainfall over the last three days, with low lying areas and settlements by riverbanks around Kuching, Kota Samarahan, Mukah, Simunjan and Limbang have been the hardest hit.

So far, the operations of Sarawak-based timber and plantation companies under the coverage of AffinHwang Investment Bank Bhd (AffinHwang Capital) have not been seriously affected by the floods.

These include Jaya Tiasa Holdings Bhd, Ta Ann Holdings Bhd, WTK Holdings Bhd and Sarawak Plantation Bhd.

“Sarawak Plant has 16,976 hectares around Mukah and management has guided that only small areas by rivers are affected by the floods,” it said in a note yesterday.

“Also, management of timber companies confirmed that their logging and plantation operations have not been affected so far by the floods.

“Generally, log production slows in December to February due to the monsoon season.”

This led AffinHwang Capital to maintain its neutral weightings for the timber and plantation sectors and stock ratings for the Sarawak-based stocks under its coverage: Jaya Tiasa at RM1.85 per share, Ta Ann at RM3.77 per share, WTK at RM1.20 per share and Sarawak Plantation at RM2.22 per share.

“We expect log prices to remain firm at US$245 to US$255 per cubic metre given the strong demand for logs coupled with the tight global supply.

“CPO’s average selling price is forecast at RM2,400 per metric tonne (revised from RM2,400 per MT in the adjustment to Budget 2015) in 2015 estimates and RM2,500 per MT in 2016E-17E.”