Ta Ann Holdings Bhd has been downgraded to NEUTRAL by MIDF Amanah Investment Bank Bhd (MIDF Research) with a revised target price (TP) of RM4.34, down from RM4.41, following weaker-than-expected 9M24 results. In contrast, Maybank Investment Bank Bhd (Maybank IB) has maintained its BUY call and raised its target price to RM4.38, up from RM4.03, citing a stronger-than-expected performance in the plantation segment.
MIDF Research's downgrade is attributed to a 5% drop in crude palm oil (CPO) production, driven by biological tree rest cycles in the Sarawak region, while Maybank's positive outlook is supported by high CPO prices and strong dividend yield.
For 9M24, Ta Ann's core profit after tax and minority interest came in at RM63.5 million, a 2% year-on-year (YoY) increase, but it fell short of both MIDF's and consensus' expectations, meeting only 60% and 68% of full-year estimates. MIDF Research has lowered its fresh fruit bunches (FFB) production forecast for FY24-FY25 to 730,000-790,000 metric tonnes, citing softer FFB yields and adverse weather conditions.
However, the plantation segment performed well, with revenue growing 30.8% quarter-on-quarter to RM416 million, driven by higher average selling prices for CPO and palm kernel. Maybank IB raised its earnings forecast following the strong CPO price environment, projecting continued growth in Ta Ann's earnings for the remainder of FY24.
The timber products segment faced challenges, with sales declining 44.9% YoY to RM51.2 million. This was due to lower prices for plywood and logs, as well as weaker demand from the Japanese housing market, leading to a loss of RM3.5 million for the segment, despite higher sales volumes.
MIDF Research's cautious stance is based on the biological tree rest cycle and reduced CPO production, while Maybank IB's positive outlook is buoyed by the robust CPO price environment and solid dividend returns.
Ta Ann's shares closed at RM4.31, with analysts split on the company's prospects. MIDF Research's revised target price reflects a more conservative outlook, while Maybank IB's target price increase highlights confidence in the company's plantation performance and earnings growth.
