TSH eyes higher oil palm yield despite El Nino - chairman


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PETALING JAYA (June 2): TSH Resources Bhd expects its oil palm fresh fruit bunch (FFB) output to continue growing this year, in spite of a “challenging” year ahead.

TSH (fundamental: 0.45; valuation: 0.5) chairman Datuk Kelvin Tan Aik Pen said the plantation sector was expected to contend with unpredictable weather and low crude palm oil (CPO) prices.

“We will continue to improve on our FFB yields and lower our cost of production. We expect to see continued growth in our (FFB) production this year,” Tan said at a press briefing after TSH's annual general meeting here today.

According to him, TSH is expanding and has allocated RM100 million for capital expenditure. Tan said the firm would continue to be on the lookout to acquire plantation land in Malaysia and Indonesia as part of TSH's growth plans.

He said an estimated 76% portion of TSH's 53,200-ha planted tracts comprised young oil palm trees.

Tan's comments came at a time when TSH had recorded weaker financials. Net profit fell to RM6.44 million in the first quarter ended March 31, 2015 from RM52.17 million a year earlier.

Revenue was lower at RM206.03 milion versus RM287.12 million.

TSH's financials had weakened as Malaysian plantation firms prepare for the El Nino weather phenomenon, which would lead to dry weather.

Such weather could curb FFB output but at the same time, lead to higher CPO prices on lower supply.

At 12.30pm, TSH shares rose three sen or 1.3% to settle at RM2.26 for a market capitalisation of RM3.06 billion.

A total of 706,700 shares changed hands.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)