Stock Name: TAANN
Company Name: TA ANN HOLDINGS BHD
Company Name: TA ANN HOLDINGS BHD
| Research House: AMMB | Price Call: BUY | Target Price: 7.60 |
We maintain BUY on Ta Ann Holdings Bhd, with an unchanged fairvalue of RM7.60/share, based on a PE of 13x pegged to FY12F EPS of 58.5 sen.
Ta Ann's FY11 net profit of RM153mil (+104%) was within expectations,but for an impairment of RM9.7mil relating to its Tasmania veneer manufacturingoperations.
Excluding the impairment, core net profit amounted to RM163mil vs. our estimate of RM162mil andconsensus' RM159mil.
It declared a second interim (single-tier) dividend of 10 sen/share,bringing the total for the full year to 20 sen/share. (vs. 8 sen in FY10) ' representing a netpayout ratio of 40% and beating our forecast of a 15 sen/share estimate.
We have accordingly adjusted upwards our forecast annual grossdividend to 20 sen/share from 15/share previously ' representing a net payoutof between 20% and 27%.
We understand that the RM9.7mil impairment was made with regardto its property, plant and equipment in Tasmania, given the continuing lossesof the operations there.
Including the impairment, the plywood division incurred aloss after tax of RM14mil (halved vs. loss of RM28.8mil in FY10). We deem theimpairment as prudent given the continuing losses ' short of closing down theloss-making unit. We do not rule out more impairment to come.
Notwithstanding that, we are maintaining our forecasts as wehad already assumed an FY11 pre-tax loss of RM5mil (excluding impairment) forthe plywood division, and further annual losses of between RM10mil and RM13milfor FY12FFY14F.
FY11 bottomline was driven by a significant growth in itsoil palm division, which posted an 87% rise in profit after tax to RM124mil(vs. FY10's RM66mil), as well as the logging division, which posted a 26% YoYrise in PAT to RM44mil.
Notably, fresh fruit production (FFB) sales volume rosenearly 50% 457,975 tonnes from 310,870 tonnes in FY10, while average CPO pricerose 23% to RM3,306/tonne from RM2,691/tonne in FY10.
We continue to like Ta Ann for its rapidly growing oil palm division.Additionally, log and plywood prices are currently holding above US$210/cu mand above US$600/cu m, respectively.
Source: AmeSecurities
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