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Ta Ann: Planting The Seeds For A Bright Future (Part 1)
By: Nicholas Tan
Articles (71) Profile
By: Brian Brinker
Articles (44) Profile

Ta Ann Holdings, a major lumber company has emerged as a major player in the palm oil sector and could see some green years ahead for both of these industries underscored by strong global economic growth in 2014.

As the global economy continues to recover, consumer demand would rise. Wood, which is an essential building material for everything from housing to furniture, would also see a direct surge in demand. This year, global demand for lumber is projected to grow at least 3.4 percent, and growth could pick up even more if the world economy recovery pace accelerates .

Evidently, demand for lumber has been growing across the world, and especially in Asia, as construction of new housing has kept demand for the raw material high. Demand has been growing at an exceptionally strong pace in China as the construction boom continues. In Malaysia, construction activities are projected to grow by a solid 6.7 percent in 2014.

Some analysts believe that because of the strong demand, lumber prices could rise by as much as 30 percent by the end of 2014 .

In the palm oil sector, exports may actually decline this year due to weaker demand in Europe, even as global production is anticipated to rise by 4.8 percent. Europe’s demand for palm oil to be used in energy production has slowed. On the flip side, political instability in high oil export countries such as Russia could raise demand as Europeans look for energy alternatives to traditional fuel sources.

The Malaysian government has identified both the lumber and palm oil industries as key areas to support as the country continues to strive for Vision 2020, which focuses on achieving fully-developed status. As such, the authorities are placing emphasis on encouraging high value upstream and downstream investments, which Ta Ann has been expanding its presence in.

It should also be noted, however, that increasing civil society pressure could slow growth in demand for lumber. Increasing levels of publicity and a proliferation of national agreements to conserve natural resources such as timber could also result in more and more pressure on companies like Ta Ann.

Company Profile

Ta Ann is one of Malaysia’s leading timber companies. The company provides both logs and processed wood products, such as plywood. The company exports its products to numerous countries, including China, India, and Japan. The company now emphasises on sustainable development and is working to re-forest land in Sarawak.

It is also emerging as a major player in the palm oil plantation and refining sector. Its oil palm estate recorded fresh fruit bunch production of 528,000 metric tonnes, up from 505,205 metric tonnes in 2011.

Ta Ann operates primarily in Sarawak, East Malaysia and employs over 7,000 people.

Click here to find out more about Ta Ann’s financial highlights and key developments.

This is a co-written article of Shares Investment, which lays out the analytical ideas and thoughts of the authors, who are well versed in investments and market concepts.

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