Affin Hwang: Palm oil division to drive Jaya Tiasa profit
Malaysia to announce Samurai bond arrangers next week
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
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