By Violet Ooi
RHB upgrades Ta Ann Holdings to “buy” today on an above-expectations core net profit in the first nine months for the financial year 2014 (9MFY14).
This is due to a better-than-expected timber contributions owing to higher log production and smaller losses sustained at its plywood division, offset by lower fresh fruit bunch (FFB) production.
The Sarawak-based logging and timber products company saw its core net profit for 9MFY14 surged more than 100% year-on-year (y-o-y) on the back of a 31% increase in revenue.
Its timber division’s profit before tax (PBT) grew 78% y-o-y in 9MFY15 thanks to higher log and plywood sales volumes and prices. Its plantation division, on the other hand, saw a 26% rise in 9MFY14 PBT attributed to higher crude palm oil (CPO) prices and FFB volumes.
In addition, Ta Ann also declared a “surprisingly large” second interim net dividend per share (DPS) of 10 sen compared to 5 sen in the third quarter for the financial year 2013 (3Q13). This thus brings the year-to-date (YTD) net DPS to 20 sen.
The move according to RHB translates into net payout of 73% based on 9MFY14 earnings per share (EPS) of 27.5 sen.
“We believe that this is to return to shareholders some of the RM79 million received from the Australian government as compensation over the last two financial years,” said RHB.
RHB upgrades Ta Ann to “buy” with a target price of RM4.40 on the basis of continued strength in log dynamics as well as the smaller losses registered at the plywood division and a stabilised CPO prices.
As at 12.38pm today, Ta Ann was traded at RM3.86 up 6 sen.
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