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HLIB Research maintains Hold on TSH, ups target price to RM3.36

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HLIB Research maintains Hold on TSH, ups target price to RM3.36 Empty HLIB Research maintains Hold on TSH, ups target price to RM3.36

Post by Cals Tue 08 Jul 2014, 08:53

HLIB Research maintains Hold on TSH, ups target price to RM3.36
Business & Markets 2014
Written by theedgemalaysia.com   
Tuesday, 08 July 2014 08:26

KUALA LUMPUR (July 8): Hong Leong IB Research has maintained its Hold rating on TSH Resources Bhd with a higher target (TP) price of RM3.36 and said it was still keeping to its FFB output growth projection of 20.3% for TSH in FY14, as: (1) FFB yield at its Sabah estates have already resumed on the uptrend in recent months; and (2) its oil palm estates in Indonesia is still in fast growing phase.
In a note Tuesday, the research house said TSH’s production cost would likely decline further from FY13’s level, underpinned mainly by higher FFB output contribution from Indonesia and lower fertilizer cost.
“We also understand that the minimum wage hike in Indonesia will have minimal impact on TSH’s overall production cost,” it said.
The research house said TSH’s management hinted that it would be able to at least maintain FY13’s new planting of 3,100 ha (if not higher) this year, given the disposal of its stake in Pontian United and private placements have already brought down its net gearing to a relatively comfortable level of 0.68x (as at end 1Q14).
“The large landbank reserves and continued planting efforts will continue to drive TSH’s FFB output growth over the longer term.
“Maintain earnings forecasts. TP raised by 6% to RM3.36 as we updated our valuation parameters. Maintain Hold recommendation,” it said.
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