Jaya Tiasa sees stronger growth from palm oil division

Jaya Tiasa Holdings Bhd (Jaya Tiasa) recorded strong reported stronger profit attributable to higher fresh fruit bunches (FFB) and crude palm oil (CPO) sales volumes, analysts observed.

However, they also note that the company’s first nine months of the financial year 2020 (9MFY20) results came below expectations due to higher-than-expected losses from its timber division and a higher effective tax rate.

In a report, the research team at Affin Hwang Investment Bank Bhd (Affin Hwang) said Jaya Tiasa reported a core net loss of RM35.7 million in 9MFY20, which was below its expectations due to higherthan-expected losses from the timber division and a higher effective tax rate.

“Jaya Tiasa’s 9MFY20 revenue was at RM564 million, up 12 per cent year-on-year (y-oy), mainly attributable to the higher contribution from its palm-oil (up 13 per cent y-oy due to higher CPO selling prices) and timber divisions (up 10 per cent y-o-y due to higher sales volumes for log and plywood products),” it said.

It also pointed out that Jaya Tiasa posted a narrower loss before tax (LBT) of RM22.2 million in 9MFY20 compared with a LBT of RM171.3 million in 9MFY19.

“The palm-oil division reported stronger profit (more than 100 per cent y-o-y), attributable to higher FFB and CPO sales volumes combined with lower production cost as a result of higher production,” it added.

However, Affin Hwang said losses from the timber division widened by 78 per cent y-oy due to diminishing margin from weaker timber-product selling prices.

“After excluding one-off items, Jaya Tiasa posted a core net loss of RM35.7 million in 9MFY20 as compared to a core net loss of RM183.4 million in 9MFY19,” it explained.

On a quarterly basis, the research team said Jaya Tiasa’s revenue in 3QFY20 declined by 22.6 per cent q-o-q to RM144.6 million, attributable to lower revenue contributions from its timber and palm-oil divisions.

“Also, Jaya Tiasa reported a larger core net loss of RM44.6 million compared with a core net loss of RM8 million in 2QFY20 due to losses at both divisions,” it said.