Ta Ann continues to deliver strong results

0

Given little-to-no forward sales, Maybank Research believes Ta Ann will be a prime beneficiary of the historic high CPO ASP in 2Q22.

KUCHING (Aug 1): Ta Ann Holdings Bhd (Ta Ann) is expected to deliver another strong set of core performance for its second quarter of financial year (2QFY22) driven by both its oil palm and timber divisions.

According to Maybank Investment Bank bhd (Maybank Research), the Sarawak-based planter’s net cash position and still good crude palm oil (CPO) price presents upside risk to the research firm’s 60 per cent dividend payout ratio (DPR) assumption.

“We forecast Ta Ann’s 2Q22 core profit after tax and minority interest (PATMI) to be in the region of RM105 million to RM110 million, bringing 1H22 core PATMI to RM181 million to RM186 million,” it said in a review of its results.

“It is on track to achieve our RM309 million full-year PATMI forecast. Its 2Q22 results will be driven by strong oil palm plantation contribution underpinned by better CPO average selling prices (ASPs) and higher fresh fruit bunch (FFB) output.”

Given little-to-no forward sales, Maybank Research believed Ta Ann will be a prime beneficiary of the historic high CPO ASP in 2Q22. It further expect Ta Ann’s CPO ASP for 2Q to broadly mirror that of MPOB’s ASP of RM6,550 per tonne.

Its 2Q FFB output of 161,755 outperformed national trend.

Analysts expect Ta Ann’s timber contribution to be sustained in 2Q as the group reported a 1Q22 timber profit before tax of RM22 million.
“We expect its strong 1QFY22 timber earnings to be sustained, if not improve, in 2Q22 owing to limited supply and stringent environmental control over logs harvesting,” it continued.

“Its 2Q22 earnings will be driven by higher logs output of 84,740 cubic metres, and robust logs and plywood prices. Its 2Q headline may be distorted by accounting fair value loss.”

While it expect Ta Ann’s core PATMI to be good, MIDF Research cautioned that the 2Q headline profits could be dragged down by anticipated fair value (FV) loss on biological assets following the sharp decline in CPO price towards end-June.

“We believe a large part of the RM28.5 million FV gain on biological assets recorded in 1QFY22 could be reversed in 2Q,” it said.

“Nonetheless, these accounting FV gains/losses are typically discounted in arriving at our core PATMI analysis.

“We are maintaining our earnings forecasts, premised on CPO ASP assumptions of RM5,000 per tonne (FY22) and RM3,400 per tonne (FY23) respectively.”