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Ta Ann: Planting The Seeds For A Bright Future (Part 2)
By: Nicholas Tan
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By: Brian Brinker
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After exploring Ta Ann Holdings’ industry outlook, let’s take a closer look into this financial performance and key developments.

Financial Highlights

As a commodity producer, Ta Ann is subjected to global commodity price swings for palm oil and lumber. Both of these markets have been somewhat volatile in recent years. It should come as no surprise then that the company saw its revenue decline from RM926 million in FY11 to RM770 million in FY13. Recurring net profits in 2011 were an astounding RM154.7 million but had tapered off to RM58.2 million in 2013.

For FY14, revenue is projected by Maybank Research to hit RM929.6 million, and RM997.2 million in FY15. Recurring net profits are projected to reach RM81.5 million and RM117.4 million in 2014 and 2015, respectively.

Latest Developments

• CIMB Equities Research recently visited three of Sarawak’s largest timber companies, including Ta Ann, and remains upbeat on the lumber industry.
• Sustainable certified palm oil sales have risen by 50 percent. Ta Ann has been working aggressively to increase the percentage of its palm oil and forest holdings that are certified.
• Despite fears of a palm oil export slow down this year, exports have recently been rising in recent weeks.
• The company recently sponsored the 14th Jubilee Park Sarawak Health Marathon, which drew international publicity.

Brokers’ Recommendations & Catalysts

Investors are by-and-large optimistic that Ta Ann will perform well in the weeks to come and most research firms have recommended a “Buy” rating on the company. The most recent “Hold” call, issued by AMMB back in February, had a target price of RM4.00.

At the same time both CIMB Equities Research and Maybank Research issued “Buy” calls with target prices of RM4.79 and RM4.75 respectively. Kenanga was the most optimistic of all, setting its target price at RM5.00. As of 9 May, Ta Ann stocks were trading at RM4.18.

The most recent target price update, issued by MIDF on 2 April, shared the optimism with a target price of RM4.75 and a “Call” rating on the stock. Better palm oil prices and Ta Ann’s young palm oil plantations seem to have most analysts feeling confident that Ta Ann will perform well in the months ahead.

Price Chart of Ta Ann Holdings

Source: FactSet

This article is brought to you by Bursa Malaysia Berhad. The research in this article was conducted independently by Pioneers & Leaders (Publishers) Pte Ltd (“Pioneers & Leaders”) and the views and opinions expressed in this article are Pioneers & Leaders’ own and do not represent the views and opinions of Bursa Malaysia. Bursa Malaysia does not warrant or represent, expressly or impliedly as to the accuracy, completeness and currency of the information in this article. In no event shall Bursa Malaysia be liable to the reader or any other third party for any claim howsoever arising out of or in relation to this article.
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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