Biological tree rest cycle hits Ta Ann in 9MFY24, but uprise ahead

KUCHING (Nov 26): After excluding the change in fair value of biological assets and forex gain, Ta Ann Holdings Bhd’s (Ta Ann) core profit after tax and minority interest (Patami) came in at RM63.5 million.

This brings its Patami for the first nine months of financial year 2024 (9MFY24) to RM129.72 million.

While this was largely considered below consensus estimates, analysts with MIDF Amanah Investment Bank Bhd (MIDF Research) said this was due to biological tree rest cycle hitting the Sarawak region.

“Additionally, crude palm oil (CPO) production was also down by five per cent y-o-y due to aforementioned factor,” it said in its review on Ta Ann.

“The segment sales declined to RM51.2 million, in tandem with softer average selling prices (ASPs) of plywood and export logs subsegment that easing by 7.8 per cent y-o-y and 5.7 per cent y-o-y, respectively.

“The profit before tax-row continued its red circa RM3.5 million loss, despite the higher sales volume recorded dragged by the higher cost of production.

“It is worth noting that the logs and plywood ASP was weaker following its normal trend where it influenced the depreciation of Japanese yen on top of softer demand from Japanese housing market in the third quarter of 2024.”

In contrast, MIDF Research saw that oil palm rose to RM416 million, in tandem with higher CPO and palm kernel (PK) average selling price realised at RM3,980 per metric tonne (MT) and RM2,435 per MT, respectively.

Meanwhile, earnings jumped to RM108.4 million with margin expanding by 12.5 points, owing to the softer all-in cost of production of which is estimated below RM2,800 per MT level.

The team over at Kenanga Investment Bank Bhd (Kenanga Research) believed Ta Ann still has time to catch up, predicting its full-year FY24 earnings to clip last year’s.

“Contrary to our earlier expectation, plantation earnings are now expected to improve sufficiently y-o-yto overcome timber losses and lift FY24 earnings to surpass last year’s,” it said in its own notes.

“We are nudging up FY24 CPO price from RM4,000 to RM4,100 per MT but keeping RM4,000 intact for FY25. Overall global edible oil supply moderated to provide support for edible oil prices, including palm oil prices which are at relatively firm levels.”

Meanwhile, Kenanga Research expected Ta Ann’s cost to stay subdued on lower fertiliser and fuel costs in 4Q while better PK prices should cushion higher minimum wages in FY25.

“Timber looks to stay challenging in 4Q with modest recovery in FY25. Overall, better plantation earnings are set to cover dull timber performances in 4Q and FY25.”

-Agency

CATEGORIES
Share This

COMMENTS

Wordpress (0)
Disqus (0 )