- We maintain HOLD on Jaya Tiasa Holdings with an unchanged fair value of RM2.00/share, based on a PE of 15x FY14EPS of 13.3 sen.

- Jaya Tiasa yesterday announced an FY13 net profit of RM23mil (-83% YoY) – representing only 74% of our estimate and 54% of consensus.

- It proposed a first and final single-tier dividend of one sen/share (June 2012: 5.15 sen less 25% tax), for a payout ratio of 42%.

- The 4QFY13 performance was an improvement, as core net profit rose nearly five-fold to RM9.5mil from RM2mil in the previous quarter, but was still 67% down from the previous corresponding quarter.

- For the full year, the CPO average price stood at RM2,228/tonne (-27% YoY) vs. our estimate of RM2,350/tonne.

- While FFB production at 664,663 tonnes (+31% YoY) was just 1.5% below our estimate of 675,000 tonnes, CPO production at 59,860 tonnes (+28% YoY) was 10% short of our forecast mainly due to a lower OER of 15% vs. 16.5% in our projection and 17% in the previous 12-month period.

- Log ASP at RM556/cu m was 2% short of our estimate of RM571/cu m. On the positive side, plywood ASP at RM1,747/cu m (-7% YoY) was 10% higher than our projected number, mainly due to the stronger prices in 4QFY13.

- We are keeping our numbers for FY14F on the back of the improvement in CPO prices. We maintain our CPO average price assumption at RM2,500/tonne for FY14F and FY15F.

- Jaya Tiasa valuations are strongly backed by the anticipated FFB growth. We expect the harvest to rebound by a strong 30% to 866,000 tonnes (yield: 15.7 tonnes) for FY14F and by another 21% to breach 1mil tonnes (yield: 18 tonnes) in FY15F. The average age of its oil palm trees is over 5 years.

- Its oil palm earnings are expected to account for 63% and 72% of its FY14F and FY15F earnings, respectively.

- We maintain the log average export prices at US$206/cu m and US$202/cu m for FY14F and FY15F, respectively, and plywood export prices at US$526/cu m for each year.

- Jaya Tiasa’s long-term prospects remain intact and are premised on the strong growth of its oil palm operations backed by:- 1) favourable age profile of oil palm trees, and 2) cost savings from three new mills over the next one to two years.

Source: AmeSecurities