KUALA LUMPUR: AmResearch has maintained its Buy call on Jaya Tiasa with a lower fair value of RM2.13/share, as its rolled forward its valuation base to FY16F, pegged to a PE of 20 times on an EPS of 10.7 sen/share.
In a note on Wednesday, the research house said excluding the timber business, its fair value implies a plantation valuation of only RM32,000/ha (planted area at ~67,000ha) vs. recent market transactions of over RM80,000/ha.
"This, we believe, is fair given the poor performance of the plantation division," it said.
It noted that Jaya Tiasa’s share price has fallen sharply due to the disappointments in its oil palm plantation and plywood businesses.
It posted a 2QFY15F core net loss of RM2.9mil, stemming from losses at its plantation and plywood divisions, which may worsen in 3QFY15 due to sharply lower volumes in FFB output.
"Our revisions bring down our FY15F and FY16F earnings forecasts by 42% and 37%, respectively.
"This is on the back of a 15% cut in our FFB output projections for each of FY15F and FY16F. We have also cut our net profit projection for the manufacturing division for FY15F to RM0.5mil from RM8mil previously.
"Our FFB yield assumptions are cut to 13.4 tonnes/ha for FY15F as it continues to be dogged by inefficient plantation operations," it said.
AmResearch said Jaya Tiasa's FFB output had dipped sharply for January and February 2015.
"We expect it to improve from March onwards, with an average monthly output of 65,000/tonnes for the rest of FY15F and moving into FY16F.
"We had earlier expected it to breach the 1mil tonne mark by FY6F.
"We do not rule out that possibility, but now project a more conservative forecast of 900,000 tonnes," it added.
A consensus re-rating is unlikely to occur if it fails to show a convincing turnaround in FFB yield within the next six months to Sept 2015, it noted.
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