- We maintain HOLD on Ta Ann Holdings Bhd with an unchanged fair value of RM4.00/share based on a PE of 15x against an FY14F core EPS of 26.7 sen.

- Ta Ann yesterday announced a core net profit of RM51mil (-29% YoY) – in line with our forecast of RM53mil, but 18% below consensus’ RM62.3mil. Apart from an earlier 5 sen/share dividend, no other amount was declared; we had anticipated a 10 sen/share payout for the year.

- For 4QFY13, an inventory write-down of RM21mil (for Tasmania veneer), and write-back of PPE impairment and tax provision totalling RM40.5mil (which were earlier effected in 2QFY13) brought the FY13 bottom line to RM92mil.

- For FY13, the EIs included the recognition of the 1st tranche of compensation from the Australian government of RM62mil. Pursuant to this, it had made a tax provision of RM9.52mil and PPE impairment of RM31mil.

- For 4QFY13, its core net profit came in at RM11mil (-67% QoQ and -29% YoY), as operations continued to be affected by Tasmania with plywood division losses of ~RM18 at the pre-tax level. Pre-EI losses for plywood totalled ~RM40mil for the year – in line with our forecast of RM38mil.

- For FY13, FFB output rose by 5% YoY to 528,495 tonnes (yield: 18.5%) – in line with our estimate of 534,800 tonnes, while CPO volume rose 17% to 93,752 tonnes (OER: 20%) vs. our estimate of 91.393 tonnes.

- Log export volume growth was flat at -1% YoY, with 177,058 cu m vs. 178,884 cu m in FY12 – in line with our estimate of 172,000 cu m. Plywood sales growth was also flat at +0.2% YoY, with 190,632 cu m vs. 190,220 cu m in FY12 (our estimate: 185,436 cu m).

- CPO average selling price was at RM2,268/tonne (-21% YoY), ~2% below our estimate of RM2,305/tonne. MPOB’s ASP totalled RM2,367/tonne. Log export ASP was also in line with our forecast, at RM235/cu m (+13% YoY) vs. ours at US$228/cu m. The plywood ASP came in at US$516/cu m (-4% YoY) vs. our estimate of US$509/cu m.

- For the short and medium term, Ta Ann’s growth prospects remain tied in with CPO prices, while its timber operations would continue to be hampered by its Tasmanian woes.

- Ta Ann still has 7,100ha of plantable landbank (with 1,600ha already cleared). Estate expansion would be an issue unless it can develop land in compliance with Wilmar’s environmental protection policy or secure contracts with less stringent refineries.

Source: AmeSecurities