Published: Thursday June 21, 2012 MYT 8:27:00 AM
RHB Research maintains Outperform on Jaya Tiasa, ups FV to RM9.05
KUALA LUMPUR: RHB Research Institute is maintaining its Outperform on Jaya Tiasa but raised the fair value from RM8.55 to RM9.05 based on sum-of-parts.
It said on Thursday that FY04/12 core net profit was below expectations. Key variances were higher-than-expected interest expense and lower-than-expected selling prices for logs (-33% on-year) resulting in lower margins of 13% (versus our expectations of 24%).
“Note that Jaya Tiasa is changing its FYE to June (from April previously), and will be reporting two month profits in its next set of results. We have already adjusted our forecasts to take this into account,” it said.
RHB Research cut its FY06/12-14 forecasts by 19%, 10.7% and -3%, after adjusting for lower log prices. It also raised its interest rate assumptions to account for the higher interest charges for FY06/12, but left its assumptions for FY06/13-14 intact.
“Although we are maintaining our target price-to-earnings ratio (PER) of 14 times for Jaya Tiasa's plantation division and 9x for the timber division, we have rolled forward our valuation base year to CY13 (from CY12).
“Therefore, despite our earnings downgrade, our SOP-based fair value has been raised to RM9.05 (from RM8.55). We maintain our Market Perform call on the stock,” it said.