PETALING JAYA: Ta Ann Holdings Bhd
’s upstream plantation business is set to benefit from higher crude palm oil (CPO), palm kernel oil prices (PKO) and external fresh fruit bunch (FFB) which will offset any fall in its production.
Ta Ann has benefitted from higher CPO and PKO prices year-to-date (y-t-d), which has been reflected in its improved share price performance, but RHB Research warned that should CPO prices fall, Ta Ann would be more susceptible than its peers, with earnings to be affected by 12% to 15% for every RM100 a tonne change in CPO price.
RHB Research forecast CPO prices to ease in the coming months with the peak output season.
It added that Ta Ann had been expanding its supply chain to increase external FFB purchases as seen in the first half of financial year 2025 (FY25), where outside crop purchases rose 10% to 12% year-on-year (y-o-y).
“Ta Ann expects external FFB to make up about 65% of its total FFB processed in FY25-FY27 (FY22-FY24 average: 59%).
“However, its internal output fell 7% y-o-y in y-t-d August versus down 4% in y-t-d July, below its guidance of up 6% to 12% for FY25.
“We raise external FFB purchase assumptions accordingly, while keeping internal output growth at 3% y-o-y for FY25,” RHB Research stated in its latest report on the Sibu-based planter.
The higher input of external sourced FFB has led RHB Research to raise Ta Ann’s projected FY25 to FY27 earnings by 6% per year.
It retained its “neutral” call on the counter with a new target price of RM3.95 a share based on an unchanged 11 times FY26 price earnings (PE) multiple.
At last look, Ta Ann was trading at RM4.15 a share at 9.8 times FY26 PE.
