Ta Ann’s Certificate for Forest Management award garners neutral views
KUCHING: Ta Ann Holdings Bhd’s (Ta Ann) recent Certificate for Forest Management award has garnered neutral views from analysts given that its earnings impact is likely to be minimal in the near term.
In a filing to Bursa Malaysia, Ta Ann announced that the group’s Kapit Forest Management Unit (FMU), managed by wholly-owned subsidiary Tanjong Manis Holdings Sdn Bhd, has been awarded the Certificate for Forest Management (Natural Forest) under the Malaysian Timber Certification Scheme (MTCS), a scheme endorsed by the Programme for the Endorsement of Forest Certification (PEFC).
“The Forest Management Plans for another two FMUs have been approved by Forest Department Sarawak (FDS). Raplex FMU is expected to be certified by 2019 whereas Pasin FMU is targeted to be certified by 2020,” Ta Ann said.
Meanwhile, the research arm of MIDF Amanah Investment Bank Bhd ( MIDF Research) was neutral on this latest development.
“We believe that Ta Ann should be able to increase its production of certified plywood products following the certification.
“However, earnings impact is likely to be minimal in the near term as plywood products margin tend to be small,” MIDF Research noted.
MIDF Research thus maintained its core earnings estimate of RM64.6 million for financial year 2018 (FY18).
For FY19, the research arm’s core earnings estimate was unchanged at RM81.8 million.
All in, MIDF Research maintained its ‘sell’ call on Ta Ann due to weak earnings prospect for both plantation and timber segment in the near term.
The target price for Ta Ann was also left unchanged at RM2.30 per share.