Posted on August 8, 2012
The Borneo Post
KUCHING: Sarawak timber concessionaire, Jaya Tiasa Holdings Bhd (Jaya Tiasa) is experiencing a downtrend for its log prices in the quarter ended April 2012 due to the continued depreciation of the Indian rupee, which led to Indian buyers only buying the absolute necessity in terms of volume and preferring to buy high quality logs.
According to RHB Research Institute Sdn Bhd (RHB Research), Jaya Tiasa’s average log prices fell 6.3 per cent quarter-on-quarter (q-o-q) and 32.5 per cent year-on-year (y-o-y) which was at the price of RM472/cubic metres (m3) or about US$150/cubic metres (m3).
It noted that some of the lower quality logs produced by Jaya Tiasa was because of the impact from the wet weather in the previous quarter.
Going forward, Jaya Tiasa management had highlighted that log prices had since improved from May onwards and were now back to the US$220-250/m3 levels.
“Based on these factors and taking into account the twelve months ended April 2012 average price of RM558/m3 (US$182/m3), we believe our average log prices
assumption of US$180/m3 for the fourteen months financial year 2012 (14MFY12) production coming in at 1.31 million m3, 30 per cent above our forecasts,” quoted by RHB Research.
It added that as for plywood produce, Jaya Tiasa management continued to emphasise that its strategy at the current juncture was to maximise its log export sales given the better margins, whilst utilising the remaining logs which were not being exported to process into plywood.
On the other hand, plywood prices had also been on a downtrend of late, falling nine per cent q-o-q in the quarter ended April 2012 to RM1,792/m3 (or US$590/m3).
“As plywood prices have not seen an upstick yet from May and given Jaya Tiasa’s average selling price of RM1,929/m3 (US$630/m3), we believe our price projection of US$620/m3 for fourteen months financial year 2012 is achievable,” added the analyst.
Going forward, Jaya Tiasa management maintained its fresh fruit bunches (FFB) growth expectations of 30 per cent to 40 per cent per annum for the six months of financial year 2013 to 2014, higher than forecast by RHB Research of 25 per cent to 30 per cent.
The research firm highlighted that Jaya Tiasa’s new planting had slowed down considerably in the twelve months ended April 2012 to 2,308 hectares (from 7,126 ha in the previous year), below its initial estimates of 6,070ha.
“Jaya Tiasa management maintains its projections of achieving a planted area of 67,587 ha by the sixth month of financial year 2013, which implies new planting of 10,262ha,” said the analyst adding that RHB Research maintained its new planting target forecast at 6,000 to7,000ha per annum for Jaya Tiasa.
Coupled with the risks of rising timber and crude palm oil prices; stronger than expected recovery in the global economy and significant decline in crude oil related glue and logistical costs, the research firm adjusted its forecast for Jaya Tiasa by 1.6 per cent to 4.1 per cent for FY12/FY13 and down by 2.4 per cent for FY14.
Hence, it pegged Jaya Tiasa’s target price at RM2.95 per share based on unchanged target price earnings ratio of nine times calendar year 2013 earnings for the timber division and 14 times calendar year 2013 for the plantation division.
The Borneo Post
KUCHING: Sarawak timber concessionaire, Jaya Tiasa Holdings Bhd (Jaya Tiasa) is experiencing a downtrend for its log prices in the quarter ended April 2012 due to the continued depreciation of the Indian rupee, which led to Indian buyers only buying the absolute necessity in terms of volume and preferring to buy high quality logs.
According to RHB Research Institute Sdn Bhd (RHB Research), Jaya Tiasa’s average log prices fell 6.3 per cent quarter-on-quarter (q-o-q) and 32.5 per cent year-on-year (y-o-y) which was at the price of RM472/cubic metres (m3) or about US$150/cubic metres (m3).
It noted that some of the lower quality logs produced by Jaya Tiasa was because of the impact from the wet weather in the previous quarter.
Going forward, Jaya Tiasa management had highlighted that log prices had since improved from May onwards and were now back to the US$220-250/m3 levels.
“Based on these factors and taking into account the twelve months ended April 2012 average price of RM558/m3 (US$182/m3), we believe our average log prices
assumption of US$180/m3 for the fourteen months financial year 2012 (14MFY12) production coming in at 1.31 million m3, 30 per cent above our forecasts,” quoted by RHB Research.
It added that as for plywood produce, Jaya Tiasa management continued to emphasise that its strategy at the current juncture was to maximise its log export sales given the better margins, whilst utilising the remaining logs which were not being exported to process into plywood.
On the other hand, plywood prices had also been on a downtrend of late, falling nine per cent q-o-q in the quarter ended April 2012 to RM1,792/m3 (or US$590/m3).
“As plywood prices have not seen an upstick yet from May and given Jaya Tiasa’s average selling price of RM1,929/m3 (US$630/m3), we believe our price projection of US$620/m3 for fourteen months financial year 2012 is achievable,” added the analyst.
Going forward, Jaya Tiasa management maintained its fresh fruit bunches (FFB) growth expectations of 30 per cent to 40 per cent per annum for the six months of financial year 2013 to 2014, higher than forecast by RHB Research of 25 per cent to 30 per cent.
The research firm highlighted that Jaya Tiasa’s new planting had slowed down considerably in the twelve months ended April 2012 to 2,308 hectares (from 7,126 ha in the previous year), below its initial estimates of 6,070ha.
“Jaya Tiasa management maintains its projections of achieving a planted area of 67,587 ha by the sixth month of financial year 2013, which implies new planting of 10,262ha,” said the analyst adding that RHB Research maintained its new planting target forecast at 6,000 to7,000ha per annum for Jaya Tiasa.
Coupled with the risks of rising timber and crude palm oil prices; stronger than expected recovery in the global economy and significant decline in crude oil related glue and logistical costs, the research firm adjusted its forecast for Jaya Tiasa by 1.6 per cent to 4.1 per cent for FY12/FY13 and down by 2.4 per cent for FY14.
Hence, it pegged Jaya Tiasa’s target price at RM2.95 per share based on unchanged target price earnings ratio of nine times calendar year 2013 earnings for the timber division and 14 times calendar year 2013 for the plantation division.
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