KUALA LUMPUR: RHB Research Institute is maintaining its Outperform recommendation on JAYA TIASA HOLDINGS BHD [] with an indicative fair value (FV) of RM4.43.
The research house said on Wednesday, Sept 29 the FV was based on 12 times CY11 timber and PLANTATION [] division earnings.
'We believe that Jaya Tiasa's prospects are looking up, given improving average selling prices of plywood and Japan housing starts. Earnings momentum is also supported by still strong demand for logs from China and India as well as the maturing age profile of Jaya Tiasa's plantation,' it said.
For the first quarter ended July 31, 2010, Jaya Tiasa's net profit was RM22.69 million versus only RM791,000 a year ago. Revenue rose 12% to RM185.5 million from RM166.3 million. Pre-tax profit jumped to RM30.1 million from RM2.1 million.
Better results in revenue and pre-tax profit were mainly due to improved proceeds from logs sales with 7% increase in average selling price; better margin of plywood sales with 16% reduction in costs of production due to higher production volume; and 66% increase in sales volume and 9% higher average selling price of fresh fruit bunches (FFB).
'The 1Q FY04/11 net profit of RM22.5 million came in at 31% and 40% of our and consensus forecast respectively. In line with our forecast as we expect Jaya Tiasa to record lower net profit in the next few quarters due to the strengthening of RM versus US dollar,' it said.
The research house said on Wednesday, Sept 29 the FV was based on 12 times CY11 timber and PLANTATION [] division earnings.
'We believe that Jaya Tiasa's prospects are looking up, given improving average selling prices of plywood and Japan housing starts. Earnings momentum is also supported by still strong demand for logs from China and India as well as the maturing age profile of Jaya Tiasa's plantation,' it said.
For the first quarter ended July 31, 2010, Jaya Tiasa's net profit was RM22.69 million versus only RM791,000 a year ago. Revenue rose 12% to RM185.5 million from RM166.3 million. Pre-tax profit jumped to RM30.1 million from RM2.1 million.
Better results in revenue and pre-tax profit were mainly due to improved proceeds from logs sales with 7% increase in average selling price; better margin of plywood sales with 16% reduction in costs of production due to higher production volume; and 66% increase in sales volume and 9% higher average selling price of fresh fruit bunches (FFB).
'The 1Q FY04/11 net profit of RM22.5 million came in at 31% and 40% of our and consensus forecast respectively. In line with our forecast as we expect Jaya Tiasa to record lower net profit in the next few quarters due to the strengthening of RM versus US dollar,' it said.
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