Af­fin Hwang: Palm oil divi­sion to drive Jaya Ti­asa profit

Malaysia to an­nounce Sa­mu­rai bond ar­rangers next week

The Star Malaysia - StarBiz - - News -

PETALING JAY: Jaya Ti­asa Hold­ings Bhd’s palm oil divi­sion is ex­pected to drive earn­ings due to ris­ing crude palm oil (CPO) pro­duc­tion, bet­ter prices and lower pro­duc­tion costs.

Af­fin Hwang Cap­i­tal re­search said CPO prices are ex­pected to in­crease in the first quar­ter as Malaysian palm oil in­ven­tory de­clines given the sea­sonal pro­duc­tion de­clines and higher world palm oil con­sump­tion.

“For Jaya Ti­asa, we fore­cast CPO av­er­age sell­ing price to be RM2,230-2,500 per met­ric tonne for FY19-21 after prices bot­tomed out at RM1,720 per tonne in Novem­ber 2018,” it said.

For its tim­ber divi­sion, the re­search house fore­casts that it will turn prof­itable in FY19 from losses in FY18, mainly due to an in­crease in tim­ber prod­uct av­er­age sell­ing prices.

This will be par­tially off­set by the de­cline in tim­ber prod­ucts sales vol­ume due to lower log pro­duc­tion es­ti­mated in FY19-21.

“Sim­i­lar to Ta Ann Hold­ings Bhd, Jaya Ti­asa is also ap­ply­ing for Cer­tifi­cate for For­est Man­age­ment Units (FMU), which al­lows the com­pany to in­crease their log ex­ports quota to 40% from 20%.

“Jaya Ti­asa could po­ten­tially ob­tain the cer­tifi­cate by 2020,” said Af­fin Hwang.

The re­search house made no ma­jor changes to its FY19-21 es­ti­mated core earn­ings per share fore­casts and main­tained its “hold” call with an un­changed tar­get price of 50 sen. PUTRAJAYA: Fi­nance Min­is­ter Lim Guan Eng will an­nounce the name of the ar­rangers for the 200 bil­lion yen (US$1.9bil) Sa­mu­rai bond next week.

Com­ment­ing on a Bloomberg re­port that Malaysia had se­lected the bankers for the coun­try’s first Sa­mu­rai bond sale, he said: “Let’s not get into specifics.

“You will know how much of next week.

“We will make the fi­nal an­nounce­ment next week.

“We will in­vite the Ja­panese am­bas­sador to be present when we make the an­nounce­ment.”

Bloomberg ear­lier re­ported that Malaysia had picked the ar­rangers for the bond is­suance, which in­cluded HSBC Hold­ings Plc, Mizuho Fi­nan­cial Group Inc and No­mura Hold­ings Inc.

Dur­ing the an­nounce­ment of Bud­get 2019 on Nov 2, Lim said the Ja­panese gov­ern­ment had of­fered to guar­an­tee 200 bil­lion yen, or RM7.4bil, worth of Sa­mu­rai bond is­suance, with a 10-year ten­ure via the Ja­pan Bank of In­ter­na­tional Co­op­er­a­tion at an in­dica­tive coupon rate of 0.65%, which was ex­pected to be is­sued be­fore March 2019.

Malaysia had asked for yen loans dur­ing Prime Min­is­ter Tun Dr Ma­hathir Mo­hamad’s first meet­ing with his Ja­panese coun­ter­part, Shinzo Abe, in June 2018, to help re­solve Malaysia’s debt. — Ber­nama

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CPO up­trend: Af­fin Hwang Cap­i­tal re­search said CPO prices are ex­pected to in­crease in the first quar­ter as Malaysian palm oil in­ven­tory de­clines given the sea­sonal pro­duc­tion de­clines and higher world palm oil con­sump­tion. — Bloomberg

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