PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 2 Jul 2020, 10:24 AM


Riding on Stronger CPO Prices

Author:   |    Publish date:

TSH Resources saw its 1QFY20 earnings double to RM24.7m on the back of stronger CPO prices. The strong set of results accounted for 42% and 37% of our and consensus expectations, respectively. Despite the stronger-than expected results, we keep our earnings forecasts unchanged as we expect results to be weaker in the subsequent quarters due to a sharp correction in CPO prices. No dividend was declared for the quarter. Maintain Neutral call with an unchanged TP of RM1.03.

  • 1QFY20 revenue (QoQ: +6.6%, YoY: +24%). The stronger sales of RM257.4m in the first quarter were mainly driven by plantation (YoY: +22.7%) and other segments (YoY: +33%). The increase in plantation sales was mainly led by both higher CPO prices and FFB production. 1QFY20 average CPO prices surged from RM1,911/mt to RM2,599/mt. Meanwhile, 1QFY20 FFB production climbed 1.6% YoY to 207,727mt as Indonesian FFB production, which made up 90% of group production, saw an increase of 5.4% YoY while Sabah production dipped 24.6% YoY. Meanwhile, contribution from other segment rose 33% YoY to RM35.5m on the back of stronger wood sales after recovering from the fire incident.
  • Core earnings surged to RM24.7m. The strong earnings growth was bolstered by plantation segment, which jumped 3-fold to RM55.8m while earnings from other segment nearly dipped 30.6% YoY to RM6.8m, dragged by lower earnings contribution from bio-integration business as its production was impacted by lower supplies of raw materials. Driven by stronger CPO selling prices, plantation earnings margin improved from 9.6% to 25.1%.
  • Outlook. Its plantation and palm oil mill in Sabah experienced disruption for nearly 15 days as state government imposed lock-down due to the Covid-19 outbreak. It is worth noting that CPO production from Sabah contributed about 39% of total CPO production. We think impact of the temporary suspension was slightly negative to the Group. Meanwhile, the FFB production is expected to grow by 8%-12% YoY. The allocated capex for FY20 is about RM80m-100m, mainly for the immature area and normal maintenance. The total mature area is expected to increase by 1,000ha this year to 41,275ha.

Source: PublicInvest Research - 22 May 2020

Share this
Labels: TSH

Related Stocks

Chart Stock Name Last Change Volume 
TSH 0.845 0.00 (0.00%) 1,816,600 

  Be the first to like this.

I3 Messenger
Individual or Group chat with anyone on I3investor
MQ Trader
View candlestick stock charts with Technical indicators
MQ Affiliate
Be rewarded by being an MQ Affiliate

623  301  516  474 

Top 10 Active Counters
 AT 0.105+0.005 
 VSOLAR 0.08-0.005 
 AT-WC 0.0450.00 
 IRIS 0.195+0.005 
 PDZ 0.07+0.02 
 ASIAPLY 0.245+0.045 
 MYEG 1.51-0.01 
 PRESBHD 0.45+0.035 
 CONNECT 0.29+0.045 
 NOTION 0.74+0.12 


1. MQ Trader - Introduction to MQ Trader Affiliate Program MQ Trader Announcement!
2. MQ Affiliate – A smarter way to earn more rewards MQ Trader Affiliate Program
3. MQ Affiliate – How to become an effective affiliate MQ Trader Affiliate Program
4. MQ Affiliate – Upgrading to Affiliate Partner MQ Trader Affiliate Program
Partners & Brokers