The perfect end to FY21
Record FY21 profits and net cash position
FY21 core PATMI beat ours and street estimates on better-than-expected CPO ASP and lower cost, likely due to shortfall in fertilising activities. TAH continues to be a prime beneficiary of high spot prices in FY22E as it has no forward sales. However, given recent share price run-up, TAH is no longer a value buy. D/G to HOLD given limited upside to our new TP of MYR5.32 after earnings upgrades and rolling forward valuation to FY23E on unchanged 13x PER (from MYR3.96 on 13x FY22E), -0.5SD of 5Y mean.
4Q21: Lifted by record oil palm profits
Adjusted for FV loss on biological assets (-MYR20m), 4Q21 core PATMI of MYR116m (+25x YoY, +50% QoQ) brings FY21 to MYR287m (+317% YoY), 133%/129% of our/street estimates. 4Q core PATMI growth was mainly boosted by higher plantation PBT of MYR178m (+213% YoY, +54% QoQ) on record high CPO ASP (MYR5,004/t; +61% YoY, +19% QoQ) as well as strong FFB output (+19% YoY, +5% QoQ). 4Q timber returned to the black with MYR10m PBT (-1% QoQ) in absence of impairments and write-offs recorded a year ago. Higher logs ASP (+15% YoY, +3% QoQ – in MYR) and plywood ASP (+43% YoY, +6% QoQ – in MYR) offset lower log export volume (-29% YoY, -7% QoQ) and plywood sales volume (-13% YoY, -5% QoQ) .
FY21: Unit cost down 3% YoY on missed fertilisation
We estimate TAH’s FY21 unit cost of production at MYR1,568/t (-3% YoY) despite higher windfall and Sarawak sales tax. We believe TAH did little fertilisation in FY21 on heavy rainfall and disrupted supply. For FY22E, we forecast FFB output to grow 5% YoY; half of TAH’s +10% YoY guidance.
Raising our FY22E/23E core PATMI by 90%/37%
Following our industry-wide CPO ASP revisions to MYR4,100/t (from MYR3,200/t) for 2022E and MYR3,200/t (from MYR3,000/t) for 2023E, we raise FY22E/23E core PATMI forecasts for TAH by 90%/37% respectively. We also introduce FY24E. TAH will need to play catch up on its fertilising activities as it has been behind targets for 2-3 years now. Otherwise, it risks achieving below potential FFB yields in the coming year(s). TAH declared a 1st interim DPS of 5sen for FY22E (ex-date: 15 Mar).