KUALA LUMPUR: Timber-related stocks advanced in early trade on Monday, March 14 as demand for timber products was expected to rise in the aftermath of the earthquake in Japan.
At 9.35am, Jaya Tiasa and Ta Ann added 15 sen each to RM5 and RM4.91, while WTK was up seven sen to RM1.33.
RHB Research in a note March 14 said it expects post CONSTRUCTION [] activities in Japan to repair and rebuild the damaged areas to spur demand for timber products, although this is hard to quantify at the moment.
It said Malaysia was the largest exporter of plywood to Japan.
Furthermore, imported plywood easily makes up more than 50% of the total plywood consumption in Japan, it said
The research house said demand for logs was expected to increase as well.
'Specifically, WTK and Ta Ann to benefit the most. This is because both companies mainly focus on the Japan market, which constitute about 80-90% of their plywood sales.
'Among those two companies, WTK will be the more 'leveraged' play as it is currently still a pure timber company,' it said.
RHB Research said the earthquake incident would inevitably lead investors to take notice of the improving fundamentals of the timber sector and could serve as a re-rating catalyst for the sector.
'No change to our forecast as it is still too preliminary to assess the impact of the Japan's earthquake.
'Nevertheless, as an estimate, for every US$10 per cubic metre increase in our log and plywood selling price assumptions, the earnings forecast for the timber companies under our coverage will rise by 5-12%,' it said.
At 9.35am, Jaya Tiasa and Ta Ann added 15 sen each to RM5 and RM4.91, while WTK was up seven sen to RM1.33.
RHB Research in a note March 14 said it expects post CONSTRUCTION [] activities in Japan to repair and rebuild the damaged areas to spur demand for timber products, although this is hard to quantify at the moment.
It said Malaysia was the largest exporter of plywood to Japan.
Furthermore, imported plywood easily makes up more than 50% of the total plywood consumption in Japan, it said
The research house said demand for logs was expected to increase as well.
'Specifically, WTK and Ta Ann to benefit the most. This is because both companies mainly focus on the Japan market, which constitute about 80-90% of their plywood sales.
'Among those two companies, WTK will be the more 'leveraged' play as it is currently still a pure timber company,' it said.
RHB Research said the earthquake incident would inevitably lead investors to take notice of the improving fundamentals of the timber sector and could serve as a re-rating catalyst for the sector.
'No change to our forecast as it is still too preliminary to assess the impact of the Japan's earthquake.
'Nevertheless, as an estimate, for every US$10 per cubic metre increase in our log and plywood selling price assumptions, the earnings forecast for the timber companies under our coverage will rise by 5-12%,' it said.
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