Thursday, October 13, 2011

Timber stocks climb on Japan rebuilding demand

KUALA LUMPUR: Timber stocks Jaya Tiasa and TA ANN HOLDINGS BHD [] and JAYA TIASA HOLDINGS BHD [] rose in line with the firmer recovery on Bursa Malaysia on Thursday, Oct 13 and underpinned by expected demand from Japan.

At 3.27pm, Jaya Tiasa was up 24 sen to RM5.42 with 30,900 shares done. Ta Ann added 23 sen to RM4.68 with 683,500 units transacted.

The FBM KLCI rose 12.99 points to 1,441.49. Turnover was 1.13 billion shares valued at RM1.32 billion. There were 609 gainers, 167 stocks down and 238 unchanged.

Amresearch maintained a Buy on Ta Ann, with a lower fair value of RM6.50/share (versus RM6.96 previously) based on a downward revised PE of 14 times (vs 15 times previously) against an unchanged FY11F EPS of 46.4 sen. It said the lower PE was more in line with current market valuations.

'We recently also revised downwards Jaya Tiasa's PE by one notch to 14 times for the same reason. Ta Ann is primed to benefit from the impending passing of an estimated 12 trillion yen (US$156 billion) budget that is expected to be tabled at the Diet,' it said in a report on the sector last Friday, Oct 7.

Amresearch said Ta Ann's timber prices have held up rather well, in spite of the easing of demand from Japan due to high inventory and delayed reCONSTRUCTION [] efforts.

Annualised housing starts of 841,401 units for 2011 translate into a 3.5% growth from the previous year's 813,126 units.

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