Ta Ann’s stronger earnings were mainly led by plantation earnings and a turnaround in timber segment.
KUCHING (September 1): Ta Ann Holdings Bhd’s (Ta Ann) core net earnings for its first half of financial year 2021 (1HFY21) tripled to RM93.5 million, bolstered by stronger plantation earnings and a surge in earnings contribution from its 32 per cent-owned Sarawak Plantation BHd.
The impressive results surpassed PublicInvestment Bank Bhd (PublicInvest Research) and street full-year expectations, making up 78 and 67 per cent of full-year estimates, respectively.
“For its second quarter of FY 21, the stronger group sales of RM455 million were mainly led by an increase in both timber and plantation sales,” it said in a report yesterday.
“The average crude palm oil (CPO) average selling price during 2QFY21 jumped from RM2,274 per metric tonne (MT) to RM4,137, while 2QFY21’s fresh fruit bunch (FFB) production weakened by 9.5 per cent year on year (y-o-y) to 156,000MT.
“This was dragged by worsening worker shortage issue and the impact of lower fertiliser application last year.
“Meanwhile, timber sales added seven per cent y-o-y to RM78 million as log sales doubled to RM25 million despite a 16 per cent y-o-y in plywood sales to RM51 million.
“During the quarter, 2QFY21 average log export price surged 43 per cent y-o-y to US$263 per cubic meter and plywood price grew 16 per cent y-o-y to US$544 per cubic meter.”
Notably, Ta Ann’s log export sales volume 20 per cent y-o-y to 19,262 cubic meters and plywood exports sales volume dropped 21 per cent y-o-y to 20,664 cubic meters.
PublicInvest Research saw that Ta Ann’s stronger earnings were mainly led by plantation earnings and a turnaround in timber segment.
Its plantation pre-tax earnings tripled to RM98 million, led by stronger CPO margin.
“CPO all-in production cost rose from RM1,400 per MT to RM2,000 per MT, attributed to an increase in windfall tax, manuring cost, and wages, higher third party FFB purchase as well as a decline in FFB production.
“Timber earnings saw a turnaround with a pre-tax profit of RM6.1 million on the back of higher log earnings while plywood barely breakeven.
“Meanwhile, earnings contribution from its 32 per cent-owned Sarawak Plantation doubled to RM13.1 million.”
Ta Ann has retained its FFB production target of 750,000MT for 2021 and expects production to peak this month.
The team at MIDF Amanah Investment Bank Bhd (MIDF Reseach) was optimistic on the group’s earnings outlook moving forward, predominantly premised on the favourable CPO price environment and an anticipated recovery from its timber segment.
“The profit contribution from the oil palm segment is expected to achieve stellar growth, driven by expected higher average selling prices and relatively resilient FFB
production as well as higher CPO sales volume moving forward,” it said in its own report.
“In addition, we expect the group’s timber segment to continue performing well due to recovery in demand for timber products amid increasing housing demand in Australia, the United States and other consuming countries.
“This will further drive the earnings momentum of the group.”