Ta Ann registers strong FFB growth of 47 per cent to be sustained into 2012
Posted on January 20, 2012, FridayKUCHING: Ta Ann Holdings Bhd (Ta Ann) has registered fresh fruit bunch (FFB) growth of 47 per cent year-on-year (y-o-y) for the period between January to November 2011, prompting predictions that the growth will be sustained into 2012.
“Ta Ann’s FFB production jumped by 47 per cent to 418,915 million tonnes, which was significantly higher than the industry’s average FFB growth of 11 per cent,” Kenanga Investment Bank Bhd (Kenanga Research) stated in its research report.
The research house believed that the FFB production soared in financial year 2011 as matured area had grown by 31 per cent y-o-y to 20,317 hectares. It predicted the trend to continue into financial year 2012 as the matured area would grow 26 per cent y-o-y to 25,690 hectares.
This would lead the way for FFB production to surge 31 per cent y-o-y to 596,000 million tonnes, the report said.
Kenanga Research foresaw a bountiful harvest ahead for Ta Ann as its average oil palm tree age profile of 4.5 to five years was the youngest for planters under the research house’s coverage. As the trees mature, it expected Ta Ann’s FFB production to grow at an enviable three year compound annual growth rate (CAGR) of 21 per cent.
“As oil palm trees’ FFB production usually peaks at between 10 to 12 years old, we can look ahead for at least five years of uninterrupted double digit FFB growth,” the research house enthused.
On the assumption of a disciplined planting of 3,000 hectares annually for financial years 2012 and 2013, the company’s FFB production could be maintained at a five year CAGR of 15 per cent.
The research house reiterated its view that Ta Ann should be categorised as a plantation company, noting that 72 per cent of its nine months 2011 profit before tax was derived from its plantation devision.
As the company’s FFB production surged, Kenange Research expected the plantation division preta profit contribution to reach 83 per cent and 93 per cent in financial year 2012 and 2013 estimates respectively.
Kenanga Research went on to upgrade financial year 2012 estimated core earnings by three per cent to RM195 million as it pegged a taret price of RM6.25 per share for Ta Ann.