PETALING JAYA: The outlook for Ta Ann Holdings Bhd
remained moderate, supported by improvements in its plantation business.
While the group was expected to continue facing challenges in its timber segment, the plantation division’s performance and potential improvement in weather conditions could bolster its growth prospects.
Based on its latest assessments, Maybank Investment Bank (MaybankIB) Research now projects that Ta Ann would register a muted increase of 3% year-on-year (y-o-y) in core profit after tax and minority interest (PATAMI) in the financial year ending Dec 31, 2025.
The brokerage maintained its "buy" call on Ta Ann, citing decent dividend yield of 6%. However, it lowered its target price for the counter to RM4.10 from RM4.38 previously.
MaybankIB Research said: "For 2025, we now expect a more muted 3% y-o-y core PATAMI growth on smaller timber losses as we expect better weather from the second quarter (2Q) of 2025 to lift logs and fresh fruit bund (FFB) output."
It highlighted that the earnings outlook for 2025 could improve if FFB output exceeds its conservative forecast of a 3% y-o-y increase, compared with Ta Ann’s internal target of 15%. Additionally, a better-than-expected crude palm oil (CPO) price above MaybankIB Research’s assumption of RM4,000 per tonne could provide further upside.
For 2024, Ta Ann posted a net profit of RM183.64mil on revenue of RM1.65bil, compared with a net profit of RM157.25mil on revenue of RM1.68bil in 2023. In 4Q24, Ta Ann reported a net profit of RM17.35mil on revenue of RM463.13mil, showing growth from a net profit of RM9.86mil on revenue of RM455.68mil in 4Q23.
MaybankIB Research noted that 4Q24 headline and core PATAMI fell short of expectations due to impairment losses from its Tasmanian mill, unrealised foreign exchange losses, and adverse weather conditions that impacted logs, plywood, and FFB output. The timber segment reported a loss before tax (LBT) of RM22mil in 4Q24, mainly due to reduced logs output amid the wet weather, which led to an 18% y-o-y and 29% quarter-on-quarter (q-o-q) decline in logs exports, as well as a 50% y-o-y and 22% q-o-q drop in plywood sales.
The plantation division, however, showed resilience with a pretax profit of RM83mil in 4Q24, lifted by a higher CPO average selling price of RM4,600 per tonne.
