Ta Ann’s FY21 core earnings tripled to RM284m, bolstered by stronger plantation earnings, a turnaround in timber business and higher contribution from its associate companies. The impressive results surpassed our and the street full-year expectations, making up 121% and 127%, respectively. A first interim DPS of 5sen was declared for FY22. No change to our forecasts as we have recently raised our numbers in tandem with higher CPO price assumptions. Maintain Outperform call with an unchanged SOP-based TP of RM5.96.

• Stronger topline driven by plantation sales (QoQ: +26%, YoY: +88%). The stronger group sales of RM611m were mainly led by an increase in both timber (+17% YoY) and plantation (+82% YoY) sales. Plantation sales soared 82% YoY to RM522m on the back of stronger CPO prices and higher FFB production. 4QFY21 average CPO selling price jumped from RM3,110/mt to RM5,004/mt (FY21: RM4,324/mt, YoY: +63%) while 4QFY21 FFB production rose 19% YoY to 203k mt (FY21: 690,680, YoY: - 2.7%). Meanwhile, timber sales rose 17% YoY to RM89m as plywood sales gained 37% YoY to RM69m despite a 23% YoY decline in log sales to RM16m. 4QFY21 average log export price jumped 13% YoY to USD267/cu m and plywood price grew 40% YoY to USD632/cu m. Log export sales volume fell 29% YoY to 13,411 cu m while plywood exports sales volume dropped 13% YoY to 21,988 cu m.
• Best-ever quarterly earnings. The stronger earnings were mainly led by a surge in plantation earnings and a turnaround in timber segment. Plantation pre-tax earnings nearly tripled to RM177m, led by stronger profit margin. FY21 CPO production cost averaged at RM1,600/mt (including PK credit) Timber earnings saw a turnaround with a pre-tax profit of RM10m on the back of a turnaround in both log and plywood businesses. Meanwhile, earnings contributions from its 30.4%-owned Sarawak Plantation and joint-venture owned refinery company doubled to RM19m.
• Outlook. For FY22, management maintains its FFB production growth of 12.5% to 765k mt. Log production is expected to hit 75% to 432k cum (natural log: 285k cu m, plantation log: 147k cu m), as it increases its harvesting machinery by 10 units. Plywood is expected to grow 10% YoY to 96k cu m. Meanwhile, it expects CPO production to go up by another 10%, dragged by a surge in fertilizer cost. Fertiliser application in 2021 only reached 50%, affected by the rainy period in Sarawak over the last 5 months. Management also shared its capex of RM75m for 2022 with 92% equally shared by plantation and upgrade for oil mill to reduce carbon emission. Lastly, mature area stood at 41k ha with 1,500ha due for replanting this year and its average age profile stood at 10.9 years.

Source: PublicInvest Research - 1 Mar 2022