Analysts still positive on Ta Ann’s FY20 outlook

Ta Ann’s 3QFY20 earnings is expected to improve significantly premised on higher CPO prices, expectation of higher FFB output and recovery in export log volume.

KUCHING: Analysts are still positive on Ta Ann Holdings Bhd’s (Ta Ann) financial year 2020 (FY20) outlook, with expectations that the group will record better performances in the second half of 2020 (2H20).

Affin Hwang Investment Bank Bhd (AffinHwang Capital) opined that Ta Ann’s plantation profits in 2H20 are expected to be driven by the continuous improvement in fresh fruit bunch (FFB) and crude palm oil (CPO) production as the group enters the peak production period towards October or November.

“Also, we expect the timber division performance to improve in 2H20, especially at its logs sub-division, as major importing countries such as India and Vietnam have started to resume their business activities again,” AffinHwang Capital said.

Meanwhile, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) is also positive on the group’s outlook.

“As highlighted in our previous report, investors should look beyond the second quarter of FY20 (2QFY20) results which saw timber plunging into losses from slower demand (virus-led),” Kenanga Research said.

“With the Forest Management Unit (FMU) certification for Pasin completed, the group’s total certified forest land now stands at circa 346,000 hectares (ha), pointing to an inevitable surge in log production volumes (post lockdowns).”

The research arm expected 3QFY20 earnings to improve significantly premised on higher CPO price (quarter to date 3QFY20 at an increase of 18 per cent quarter on quarter), expectation of higher FFB output (entering into peak production season) and recovery in export log volume (post lockdowns).

As for the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research), it remains encouraged on the group’s FY20 outlook, premised on the favourable CPO price environment and gradual easing of lockdowns.

“The profit contribution from the oil palm segment is expected to achieve better growth, driven by expected higher average selling price (ASP) and relatively resilient FFB production in FY20,” MIDF Research said.

“On the contrary, we expect the group’s timber segment to potentially experience tepid performance from the anticipated lower ASP and sales volume of its wood-based products from major importers such as India and Japan in the intermediate terms.

“This is based on the weakening economic indicators that could reduce development activities leading to reduced demand for its timber products.”

Moving forward, the research arm believed that the well-being of the group will still be dependent on the Covid-19 situation and its effects on the economic activities in the short and medium terms.

Sumber: Borneo Post Online

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