Latest news with #TaAnnHoldingsBhd
The Star
02-07-2025
- Business
- The Star
Plantations hold steady, await catalyst
PETALING JAYA: Analysts are mostly neutral on the plantation sector, projecting the crude palm oil (CPO) prices to trade between RM3,800 and RM4,200 per tonne in the second half of this year (2H25). According to Kenanga Research, palm oil prices are expected to stay firm through a good 2025 season, underpinned by a global edible oil supply deficit this year, which may persist into 2026. Cost pressures should also stay manageable, thanks to firm selling prices, the research house said in a note to clients yesterday. While valuations appear to have bottomed out and are not excessive, Kenanga Research noted that 'there is no strong upside catalyst either.' It pointed out that edible oil demand remains visible and resilient, with a trend-line growth of 3% to 4% yearly. Meanwhile, supply is expected to grow by only 2% to 3% over 2025 to 2026. As a result, edible oil prices, including palm oil, will likely stay sufficiently firm. Many pure upstream players have also turned net cash, including Hap Seng Plantations Holdings Bhd , Ta Ann Holdings Bhd , TSH Resources Bhd and United Malacca Bhd . 'Hence, decent to good dividend payouts can be expected, unless they embark on merger and acquisition (M&A) activities,' it added. The research house expects non-integrated planters to increasingly become dividend-yield plays. 'For larger integrated players, we expect more M&A or diversification into non-plantation businesses – hence, (they are) likely to stay net borrowers. 'Even so, as the balance sheets of integrated players such as IOI Corp Bhd , Kuala Lumpur Kepong Bhd and SD Guthrie Bhd are backed by valuable landbank, their current gearing levels should not be a key concern to investors,' Kenanga Research pointed out. It added that firm CPO and strong palm kernel selling prices are expected to help absorb most of the cost upticks in 2025. As a result, upstream margins are expected to stay healthy. Altogether, 2025 margins should stay robust, thanks to upstream operations. Kenanga Research named IOI, with a target price of RM4.10 per share, as its big-cap pick, citing its sector-leading return on equity and declining gearing, which provides greater headroom for M&A. Among pure upstream players, Hap Seng Plantations, with a target price of RM2.40, still offers good, defensive upstream exposure, supported by over RM500mil in net cash. For the longer term, United Malacca – with a target price of RM6 – should see rising profits from newly maturing estates, while TSH – with a target price of RM1.30 – is expanding its planted area by 25% to 30% over the next three to five years. Genting Plantations Bhd with a target price of RM5.70, should also see a stronger 2Q25 contribution from its newly opened Jakarta Premium Outlet. Meanwhile, CGS International Research (CGSI Research) has lifted its CPO price forecast to RM4,200 per tonne for 2025. In a report, the research house noted that upstream players stand to benefit the most from high CPO prices. 'Our earnings sensitivity analysis shows that Genting Plantations, SD Guthrie and Hap Seng Plantations deliver the strongest earnings uplift with every 5% rise in CPO price,' it noted. With the current CPO rally starting early June 2025 driven by macro and policy shocks, CGSI Research expects upstream-focused names to benefit more significantly. 'After factoring in our revised CPO price assumption, accounting for forward commitments and softer palm kernel prices, our earnings revisions suggest Hap Seng Plantations, SD Guthrie and Ta Ann are the biggest beneficiaries from higher CPO prices under our coverage,' the research house highlighted. CGSI Research also recommended investors seeking defensive plays to accumulate agribusiness companies with high dividend yields, such as Hap Seng Plantations and Ta Ann, citing more stable earnings compared to other sectors.
The Star
26-05-2025
- Business
- The Star
Ta Ann expects higher demand for plywood
KUCHING: Ta Ann Holdings Bhd is seeing a rebound in demand for its plywood products in the key Japanese market. The company reported a recovery in demand since late March amid the low plywood inventory levels in Japan. In the January to March quarter (1Q25), the group 's plywood exports plunged by 48% from a year ago. The recovery in plywood demand from Japan has resulted in greater operational efficiency and a leaner cost structure, enabling the group to maintain competitive pricing, said Ta Ann after releasing its 1Q25 financial results last week. Group managing director Datuk Wong Kuo Hea said in the company's annual report for last year that with Japan's infrastructure rebuilding efforts gaining momentum, the company anticipates a resurgence in plywood demand. He said the group's plywood business had experienced a significant setback since 2023, with demand from its primary export market, Japan, remaining sluggish due to ongoing economic headwinds. These include the lingering effects of the Covid-19 pandemic, negative population growth and an earthquake early last year. The weak market demand impacted Ta Ann group's Malaysian plywood production which shrank by 19% to 49,891 cubic metres (cu m) last year from 61,642cu m in 2023. Year-on-year, the group's plywood sales volume contracted by 24% to 52,138cu m from 68,784 cu m. In both 2023 and 2024, the group exported 99% of its plywood to Japan and the remaining 1% to Australia. In responding to the weak demand, Wong said the group had adjusted jits production to align with market demand and implemented various strategies to adapt to the evolving situation. These measures include enhancing productivity while ensuring product quality and maintaining regular communication with Japanese buyers to swiftly address market changes. 'Our dedication to sustainable forest management continues to provide a competitive edge for our key product – coated concrete plywood – which is fully Programme for Endorsement of Forest Certification-certified,' he said. Besides Malaysia, the group's Tasmanian operation in Australia also manufactures plywood products for the local market there. 'The availability of skilled workers remains the primary challenge for our Tasmanian operations. Despite this, management is focused on enhancing workforce productivity and adopting lean-manufacturing practices to ensure operational sustainability. 'Since consolidating our resources at the Smithton Mill in northern Tasmania in 2021, we have prioritised optimsing resources utilisation and implementing prudent cost management strategies to improve efficiency. 'By maintaining stringent cost control, we have successfully maintained our competitive position in the Australian market,' he added. Ta Ann manages three active forest management units in Sarawak's Rejang region covering 346.021ha.
The Star
07-05-2025
- Business
- The Star
Sarawak Plantation exceeds replanting target
KUCHING: Sarawak Plantation Bhd has aggressively pursued oil palm replanting, covering some 4,200ha last year to bolster future crop production growth. This achievement, according to executive director Datuk Wong Kuo Hea, was the result of meticulous planning and efficient execution, exceeding the company's replanting target by 5%. He added that RM54mil in capital expenditure was incurred on replanting and maintaining the group's existing immature estates in 2024. This was more than double the RM25.1mil spent on the replanting programme and estate maintenance in 2023. 'Replanting is a significant milestone for the group because it ensures long-term sustainable growth. Low-yielding old mature fields, as well as severe ganoderma infested areas, are replanted in stages. 'These areas were replanted with high-yielding seeds and are expected to drive up production growth in the coming years,' he said in the company's 2024 annual report. The high-quality seeds used were sourced from Sarawak Plantation's own nurseries, which also saw an 86% increase in sales, reaching 930,000 seeds to external parties last year compared to 2023. As one of the pioneers in Sarawak's oil palm industry, the Miri-based group has a total landbank of 42,166ha, with an additional 412ha under a joint-venture development with a state agency. The plantable area totals about 36,232ha. Currently, the group owns 13 oil palm estates and two palm oil mills across northern and central Sarawak. Sarawak Plantation is an associate of Ta Ann Holdings Bhd , its largest shareholder with a 29.4% equity interest. Wong, also managing director/CEO of Ta Ann, noted that Sarawak Plantation had successfully normalised almost the entire 6,000ha of oil palm areas identified in 2018 for improvement and enhancement, including 400ha rehabilitated last year. The remaining 20ha are expected to be normalised this year. On areas of the group's plantations which were encumbered by local villagers, Wong said via engagements with them, the group successfully resolved 100ha last year, bringing the total recovered area to some 4,300ha since 2018. Around 2,100ha of matured areas remain encumbered. Despite the challenges in recovering these areas, the group remains dedicated in rehabilitating all, or at least the majority, of these areas. In 2024, Sarawak Plantation declared 1,500ha of oil palms as matured, with young mature palms (four to six years) accounting for 9% and prime mature palms (seven to 20 years) comprising 59%. Immature and old mature palms (over 21 years) made up 25% and 7%, respectively. Sarawak Plantation also launched its own-designed and developed oil palm harvesting machines called 'Lipan' last year, as it shifts towards field mechanisation from the traditional labour-intensive harvesting method. These machines are equipped with wireless control, enabling operators to manage the harvesting process easily and efficiently. Another research initiative currently in trial is a six-wheeler, adopted from logging operations and modified to navigate rugged and hilly terrains for fresh fruit bunch (FFB) evacuation. Once further design iterations are completed, these machines are expected to serve the group's new planting areas, which are being designed for mechanisation in the future. Wong said the group is expanding the use of 'Lipan' in suitable harvesting areas and will continue to monitor and enhance their performance. Currently, 10 harvesting machines are operational across the group's plantations. 'Embracing mechanisation for harvesting and other field operations is a sustainable approach to reducing labour dependency. The group also believes that mechanisation offers many benefits, including increased efficiency and enhanced sustainable practices.' He said Sarawak Plantation's action plans for 2025 include executing effective replanting strategies to optimise planting density and expand harvesting path for future mechanised opportunities, while maintaining the yield potential of the oil palms. The group is also accelerating replanting efforts in low-yielding areas, regions severely affected by Ganorderma infestation, and areas with low palm stands, alongside recovering more encumbered areas and old mature fields. It plans to expand the facilities and production capacity of its three oil palm nurseries, which currently have the capacity to grow up to 1.2 million seedlings a year. The high-yielding and genetically superior seeds, branded 'Surea DxP', have shown to produce high FFB and oil yields. These seeds have been tested and confirmed to exhibit a moderately slow height increment, Wong added, ensuring stable yields over time while minimising the risk of disease outbreaks in the estates. — By JACK WONG
