Jaya Tiasa valuation attractive, says Affin Hwang Capital

Jaya Tiasa valuation attractive, says Affin Hwang Capital
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KUALA LUMPUR (Jan 8): Affin Hwang Capital Research has maintained its “buy” rating for Jaya Tiasa Holdings Bhd with an unchanged target price (TP) of RM1.32, and said the company’s valuation is attractive based on 9.6 times earnings per share (EPS) estimated for the financial year ending June 30, 2021 (FY21).

In a note today, Affin Hwang analyst Nadia Aquidah said she expects a strong earnings recovery in FY21, growing by more than 200% year-on-year (y-o-y) due to stronger crude palm oil (CPO) prices, while FY22 earnings could potentially decline y-o-y due to a lower CPO average selling price (ASP) forecast, though it would be partially offset by higher production.

“The resumption of construction works with the easing of lockdowns and restrictive movement control orders since mid-2020 has helped to improve demand for timber products as well as prices,” she said.

Nadia said there was no change to its CPO assumptions for Jaya Tiasa at RM2,700-RM2,500 per metric ton (MT) for FY21-22, from RM2,054 per MT for FY20, in terms of ASPs.

“We saw a V-shaped recovery in CPO prices in 2020 and we believe prices will remain supported going into the first half of 2021 (1H21), underpinned by tight stock levels, concerns about CPO production given the weather uncertainties and strong prices of other edible oils. 

“Looking at 2H21, we believe prices could potentially be under pressure as production picks up,” she said.

At 10.30am today, Jaya Tiasa's share price had fallen one sen or 1.13% to 88 sen, valuing the company at RM847.13 million.

Surin Murugiah