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Affin IB Research maintains Reduce on Jaya Tiasa, raises target price to RM2.59

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Affin IB Research maintains Reduce on Jaya Tiasa, raises target price to RM2.59 Empty Affin IB Research maintains Reduce on Jaya Tiasa, raises target price to RM2.59

Post by Cals Fri 23 May 2014, 00:09

Affin IB Research maintains Reduce on Jaya Tiasa, raises target price to RM2.59
Business & Markets 2014
Written by theedgemalaysia.com   
Thursday, 22 May 2014 08:53

KUALA LUMPUR (May 22): Affin IB Research has maintained its Reduce rating on Jaya Tiasa Holdings Bhd at RM2.69 with a higher target price of RM2.59 (from RM2.26) and said Jaya Tiasa’s 9MFY14 revenue declined by 4.3% year-on-year (y-o-y) to RM762.9 million, mainly due to lower contribution from its timber division.
In a note Thursday, the research house said despite posting a lower revenue in 9MFY14, Jaya Tiasa’s core net profit increased substantially to RM54.4 million (+450.3% y-o-y) after taking into account the impairment of financial assets coupled with fair value loss on derivative assets.
It said the 9MFY14 core net profit was nevertheless below expectations, accounting for 51% and 48% of house and consensus full year FY14 estimates respectively.
“In view of Jaya Tiasa’s unsatisfactory performance to-date, we have lowered our projected log and plywood production and raised cost assumptions.
“At the same time, we adjust on 2015-2016 CPO average selling price assumption to RM2,850/MT (previously RM2,700/MT), inline with our recent upgrade in the plantation sector.
“As a result, our earnings forecasts has been cut by 8-25% for FY14-16E. Rolling forward our valuation horizon to CY15, our SOP-derived target price is raised to RM2.59 (previously RM2.26).
“Rating for Jaya Tiasa is maintained at Reduce,” it said.
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