Maybank KE Research maintains Buy on TSH, TP RM2.38

KUALA LUMPUR: Maybank KE Research is maintaining its Buy recommendation on TSH Resources with an unchanged target price of RM2.38 based on 17 times 2014 price-to-earnings ratio (PER).
It
said on Tuesday TSH's Q1, 2013 net profit of RM20mil (up 32% on-year,
down 35% on-quarter), exceeded its expectations even though it met 23%
of its full year forecasts.
However, the net profit was in line
with consensus (21% on consensus) as fresh fruit bunches (FFB)
production rose strongly in Q1, 2013 to counter weak crude palm oil
(CPO) average selling price.
"TSH's long-term outlook remains
favourable bolstered by its young tree age of about seven years old as
it is poised to deliver 19% FY12-15 CAGR in FFB output," it said.
Maybank
Research said the positive outlook was also due to the potential
recovery in CPO price by end-Q2, 2013; stronger FFB production in the
second half of this year and higher contribution from its refinery
joint venture in the second half also.
Based on these factors, it said TSH could potentially outdo its FY13 net profit forecast of MYR85m (+11% on-year).
"A
sustained turnaround of its wood and cocoa business would further boost
our earnings growth. We keep our earnings forecasts for now," it said.