KUALA LUMPUR, July 16 – CIMB Investment Bank has initiated Ta Ann Holdings Bhd’s short-term rating with a “trading buy” as it expects the company to report stronger timber earnings in upcoming quarterly results in August.
Ta Ann started off as a timber company but has since diversified into oil palm, which has become the current largest profit contributor to the group.
“Following six consecutive quarters of weak earnings, it is time to relook the potential of Ta Ann’s timber business, as rising log and plywood prices set the tone for a recovery in its timber profits.
“Our channel checks revealed that Sarawak export log prices have risen by between 30 – 50 per cent since January, which should benefit the group as it is one of the largest timber producers in the state,” it said in a research note Tuesday.
Also, the research firm said, Ta Ann’s huge exposure to Japan makes it a good proxy for the potential upturn in that country’s housing market, which could boost plywood prices.
“We estimate Ta Ann’s timber earnings to recover from a pre-tax loss of RM18 million last year to a profit of RM21 million this year,” it added.
– BERNAMA
