HOLD for its attractive dividend yield
1Q22 core PATMI was within ours/consensus expectations. With little
forward sales, TAH will continue to enjoy the high CPO spot prices in 2Q22.
Meanwhile, its improving timber outlook may continue to surprise
positively in the near term owing to limited supply and stringent
environmental control over logs harvesting. Pending a management
update, we maintain our EPS, HOLD call and TP of MYR5.87 on 13x FY23E
PER, -0.5SD of 5Y mean. HOLD for its dividend yield of 7.5%; supported by
its net cash position. We prefer KLK MK (BUY, CP: 26.42, TP: 30.70).
High CPO ASP boosted plantation PBT
1Q22 headline PATMI jumped to MYR105m (+155% YoY, +9% QoQ). Adjusted
for FV gain on biological assets (MYR29m), 1Q21 core PATMI of MYR76m
(+155% YoY, -34% QoQ) met 25% of our and consensus full-year estimates.
The strong 1Q earnings were lifted by plantations and timber divisions.
Plantations recorded PBT of MYR92m (+115% YoY, -48% QoQ) as higher CPO
ASP achieved (+48% YoY, +11% QoQ) compensated for the lower FFB output
(-3% YoY, -35% QoQ).
Improving timber outlook, especially plywood
1Q22 timber PBT jumped to MYR22m (+403% YoY, +119% QoQ) on stronger
plywood contribution. Higher plywood ASPs (+44% YoY, +11% QoQ – in MYR)
and higher logs ASP (+16% YoY, -2% QoQ – in MYR) more than compensated
for a decline in plywood sales volume (-2% YoY, -7% QoQ) and logs exported
(-14% YoY, +50% QoQ).
A 2nd interim DPS of 10sen announced
Q1 is seasonally the weakest FFB output quarter for TAH. For 1Q, FFB
output met just 19% of our full-year forecasts but is within recent
historical ranges. FFB output is expected to be seasonally higher in 2H. We
are keeping our earnings forecasts. In the meantime, TAH is rewarding
shareholders with a 2
nd interim DPS of 10sen (1st interim DPS paid: 5sen)
that will go ex-date on 3 June (payable: 24 June).