Friday 29 Mar 2024
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KUALA LUMPUR (Nov 23): Ta Ann Holdings Bhd rose to a near two-year high on Tuesday (Nov 23) morning after posting strong third-quarter earnings, coupled with a 20 sen dividend.

The counter, which was the second top gainer so far in the day, rose as much as 23 sen or 7.17% to RM3.44. The last time the stock hovered at this level was on Jan 3, 2020, when it closed at RM3.48.

At 10.13am, the counter had pared some gains at RM3.41, still up 20 sen or 6.23%, with 1.69 million shares traded so far.

Ta Ann said in a bourse filing on Monday its net profit for the third quarter ended Sept 30, 2021 (3QFY21) surged 141.51% to RM103.29 million from RM42.77 million a year ago, underpinned by higher average selling prices (ASPs) of crude palm oil (CPO), fresh fruit bunch (FFB) production and export logs.

Its quarterly revenue also rose 37.77% to RM486.86 million from RM353.37 million for 3QFY20.

It also declared a dividend of 20 sen per share in respect of FY21, payable on Jan 24, 2022.

For the cumulative nine months ended Sept 30, 2021 (9MFY21), the group’s net profit soared 230% to RM218.4 million from RM66.27 million, while revenue jumped 50.09% to RM1.28 billion from RM854.68 million for the previous year.

Kenanga Research analyst Adrian Koh said in a note on Tuesday Ta Ann's 9MFY21 core net profit of RM170.5 million was above his (97%) and consensus (95%) expectations due to higher CPO prices.  

“The dividend declared implied a yield of 9.3%, which surprised us,” he said.

Looking ahead into 4QFY21, he said, stronger CPO prices should overshadow a slight blip in production and an expected decline in its timber division (an order slowdown during Deepavali).

He raised his FY21 core net profit projection for Ta Ann by 46% to RM257 million on higher CPO prices of RM4,200 per metric ton (MT) (versus RM3,700 per MT previously).

He also raised his FY22 core net profit forecast by 12% to RM147 million on a higher timber earnings before interest and tax (EBIT) margin of 10% (versus about 6% previously).

He maintained "market perform" on Ta Ann and revised his sum of parts-derived target price (TP) to RM3.25 (from RM2.85).

“Ta Ann is currently traded at an FY22 estimated price-earnings ratio of about 10 times, implying -0.5SD (standard deviation) from the mean, which we think is fairly valued,” he said.

Meanwhile, RHB Investment Bank Research analyst Hoe Lee Leng said in a note on Tuesday Ta Ann's 9MFY21 results exceeded expectations at 93% to 96% of her and street FY21 earnings forecasts due to higher ASPs across its timber and plantation divisions.

Given its 30% labour shortage, she thinks Ta Ann's FFB production should remain weak until year end, and cut her FY21 FFB growth forecast to -5.5%.

However, she said, the company will benefit from current high CPO spot prices as it does not engage in any forward selling at the moment.

“We continue to like Ta Ann for its inexpensive valuations (trading at 9.5 times FY22 forecast, at the lower end of its peer range of eight to 13 times) and handsome dividend yield of 9.3%,” she said.

She also adjusted her FY21 to FY23 earnings forecasts for Ta Ann by -1.6% to 6.6%.

She maintained "buy" on Ta Ann but revised up her TP to RM3.50 (from RM3.25).

Edited BySurin Murugiah
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