Stock Name: TSH
Company Name: TSH RESOURCES BHD
TSH Resources Bhd
(Aug 22, RM3.16)
Maintain Buy at RN3.15 with revised fair value of RM3.81 (from RM3.83): TSH reported 1HFY11 earnings of RM59.9 million amid stronger production and palm prices. Stripping out forex, futures and disposal gains, its core earnings came in at RM49.4 million, or 45.8% and 44.4% of our and consensus estimates. Profit in 1H11 nearly tripled as revenue and earnings before interest and tax (Ebit) surged 30% and 68.2% year-on-year (y-o-y). The company chalked up core earnings of RM33.3 million in 2QFY11, or 30.9% of our full-year forecast.
The palm oil segment's stellar performance fuelled a 91.4% quarter-on-quarter (q-o-q) jump in 2QFY11 earnings before interest, tax, depreciation and amortisation while Ebit surged 63.6% q-o-q as fresh fruit bunches (FFB) production rose 39.2%. Average crude palm oil selling prices fell by 8.2%. Wood products and cocoa manufacturing'' continued to suffer amid lower sales. TSH's Indonesian operation remains its key growth driver, with FFB production soaring 79.2% in 1HFY11. The palm oil segment contributed 97.3% of TSH's 1HFY11 Ebit. Year-to-date, the company's FFB production represents 55.1% of our full-year forecast.
We lift our FFB production forecast, which raises our FY11 and FY12 earnings estimates to RM110.2 million and RM104.4 million from RM107.7 million and RM102.4 million. Some 64% of TSH's 1HFY11 FFB production came from Indonesia.
We expect the tail-end effects of the 2009 drought to lead to unusually weak sequential production growth in 3Q in Indonesia this year. With Indonesian production likely to be less skewed towards 2H this time around and 2H prices unlikely to match those achieved in 1H, TSH's 3Q and 4Q earnings could come in weaker than 2Q.
We are rolling over our valuation horizon to 13.5 times earnings per share for the 12 months to June 2012 from FY11 EPS previously.
Maintain 'buy' with a potential 21% share price upside. ' OSK Research, Aug 22
This article appeared in The Edge Financial Daily, August 23, 2011.
Company Name: TSH RESOURCES BHD
| Research House: OSK | Price Call: BUY | Target Price: 3.81 |
TSH Resources Bhd
(Aug 22, RM3.16)
Maintain Buy at RN3.15 with revised fair value of RM3.81 (from RM3.83): TSH reported 1HFY11 earnings of RM59.9 million amid stronger production and palm prices. Stripping out forex, futures and disposal gains, its core earnings came in at RM49.4 million, or 45.8% and 44.4% of our and consensus estimates. Profit in 1H11 nearly tripled as revenue and earnings before interest and tax (Ebit) surged 30% and 68.2% year-on-year (y-o-y). The company chalked up core earnings of RM33.3 million in 2QFY11, or 30.9% of our full-year forecast.
The palm oil segment's stellar performance fuelled a 91.4% quarter-on-quarter (q-o-q) jump in 2QFY11 earnings before interest, tax, depreciation and amortisation while Ebit surged 63.6% q-o-q as fresh fruit bunches (FFB) production rose 39.2%. Average crude palm oil selling prices fell by 8.2%. Wood products and cocoa manufacturing'' continued to suffer amid lower sales. TSH's Indonesian operation remains its key growth driver, with FFB production soaring 79.2% in 1HFY11. The palm oil segment contributed 97.3% of TSH's 1HFY11 Ebit. Year-to-date, the company's FFB production represents 55.1% of our full-year forecast.
We lift our FFB production forecast, which raises our FY11 and FY12 earnings estimates to RM110.2 million and RM104.4 million from RM107.7 million and RM102.4 million. Some 64% of TSH's 1HFY11 FFB production came from Indonesia.
We expect the tail-end effects of the 2009 drought to lead to unusually weak sequential production growth in 3Q in Indonesia this year. With Indonesian production likely to be less skewed towards 2H this time around and 2H prices unlikely to match those achieved in 1H, TSH's 3Q and 4Q earnings could come in weaker than 2Q.
We are rolling over our valuation horizon to 13.5 times earnings per share for the 12 months to June 2012 from FY11 EPS previously.
Maintain 'buy' with a potential 21% share price upside. ' OSK Research, Aug 22
This article appeared in The Edge Financial Daily, August 23, 2011.
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