TSH Resources - BUY FV RM2.88

Stock Name: TSH
Company Name: TSH RESOURCES BHD

Research House: JUPITER

Price Call: BUY

Target Price: 2.88

4Q FY2011 Results 

Within expectations. TSH's FY11 results were inline with consensus and our estimates. 12-month revenues at RM1.148b made up of 96% of our full year target andPBT of RM162.4m almost made up of our full year estimate. For the full yearunder review, revenues grew 26% while operating profit rose 46% toRM166.9m.  EPS of 14.7sen was lower thanits previous year of 20.6sen on an enlarged share capital after its 1:1 bonusissue.  Overall, higher earnings wereattributable to higher CPO prices and better FFB production on improved yieldmanagement as well as higher mature acreages in Indonesia.  During the year, FFB production increased by43% to 399,604MT. The Wood products division continue to registera loss on sluggish demand from US and Europe. The Cocoamanufacturing division reported lower profits on lower productionand unfavourable cocoa butter prices.  

On a QoQ basis, despite 7% higher revenues of RM292.9m,the bottomline was lower than in 3Q on the lower CPO prices following the trendin FFB production cycle.  PBT fell 36% toRM30.1m and net profits of RM26.1m was 24% lower than last quarter's RM34.5m. Thelower PBT was also due to provision of doubtful debts in the wood productsdivision. 

Recommendation

We continue to view TSH with favour, as it canbank  on improvements in efficiency inplantation division and higher crop production from its Indonesia estates.  We are introducing our 2013 projections.  We applied a two-stage DDM valuation modelfor TSH, as we expect high growth in the coming years when more palms come intomaturity in Indonesia.  We have tweakedour target price upwards to RM2.88.  BUYrecommendation maintained.

Source: Jupiter Securities