Affin Hwang: Palm oil division to drive Jaya Tiasa profit


  • Palm Oil
  • Friday, 11 Jan 2019

CPO uptrend: Affin Hwang Capital research said CPO prices are expected to increase in the first quarter as Malaysian palm oil inventory declines given the seasonal production declines and higher world palm oil consumption. — Bloomberg

PETALING JAY: Jaya Tiasa Holdings Bhd’s palm oil division is expected to drive earnings due to rising crude palm oil (CPO) production, better prices and lower production costs.

Affin Hwang Capital research said CPO prices are expected to increase in the first quarter as Malaysian palm oil inventory declines given the seasonal production declines and higher world palm oil consumption.

“For Jaya Tiasa, we forecast CPO average selling price to be RM2,230-2,500 per metric tonne for FY19-21 after prices bottomed out at RM1,720 per tonne in November 2018,” it said.

For its timber division, the research house forecasts that it will turn profitable in FY19 from losses in FY18, mainly due to an increase in timber product average selling prices.

This will be partially offset by the decline in timber products sales volume due to lower log production estimated in FY19-21.

“Similar to TA ANN HOLDINGS BHD, Jaya Tiasa is also applying for Certificate for Forest Management Units (FMU), which allows the company to increase their log exports quota to 40% from 20%.

“Jaya Tiasa could potentially obtain the certificate by 2020,” said Affin Hwang.

The research house made no major changes to its FY19-21 estimated core earnings per share forecasts and maintained its “hold” call with an unchanged target price of 50 sen.


   

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