Thursday, July 28, 2011

AmResearch maintains Buy on Jaya Tiasa

KUALA LUMPUR: AmResearch has maintained its BUY call on JAYA TIASA HOLDINGS BHD [], with an unchanged fair value of RM8.51 based on a PE of 15 times FY12F EPS of 56.7 sen per share.

It said in a note July 28 that Jaya Tiasa recently announced a better-than-expected net profit of RM147 million for FY11 (+503% versus FY10), which was 16% and 12% above our and consensus estimates, respectively.

'Post-FY11 results, we had upgraded the stock to a BUY (from hold previously). The oil palm division, whose pre-tax profit surged 460% to RM105 million in FY11, will continue to be the star performer in the next two to three years.

'We expect FFB production to grow significantly by 45% to 520,000 tonnes in FY12F and by another 50% to 750,000 tonnes in FY13F,' it said.

AmResearch said Jaya Tiasa's mature hectarage was expected to rise 50% to over 37,000ha in FY12F and by another 30% to about 50,000ha by FY13F, after adding 70% to 25,058ha as at end-FY11.

The research house said its CPO assumption for each of FY12F-FY14F was RM3,300/tonne.

Apart from sustained demand from India for its logs, rising demand for plywood products from Japan for its reCONSTRUCTION [] efforts will also lend support to the company's performance, it said.

'Jaya Tiasa's well diversified markets put it in a good position to benefit from the strong timber market.

'Our fair PE of 15 times is well within the stock's historical five-year forward PE of between 6x and 36x, and below the average of 16 times. Jaya Tiasa is now trading at an attractive PE of 12 times,' it said.

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