WTK Holdings Bhd led gains among Malaysian timber stocks on speculation they will increase shipments to Japan after an earthquake and tsunami.

WTK Holdings jumped 6.4 per cent to RM1.34, the most in 11 months, in Kuala Lumpur trading at 11:56 a.m., while Ta Ann Holdings Bhd climbed 2.7 per cent to RM4.89 after RHB Research Institute Sdn Bhd said the lumber companies may gain from increased demand for their plywood as Japan rebuilds.

The Southeast Asian nation is the largest exporter of plywood to Japan, which was struck by an 8.9-magnitude temblor and subsequent tsunami on March 11. Bank of Japan Governor Masaaki Shirakawa pledged massive liquidity while the government prepares plans for reconstruction after the quake that may have killed 10,000 people.

Malaysian timber companies will benefit from the expected surge in demand from Japan, RHB analyst Toh Woo Kim wrote in the report. We understand from Japan Lumber Report that the plywood inventory level in Japan is currently low and their domestic plywood production has been curtailed since the second half of 2010 owing to a shortage of log supply.

Japan imported nearly 1.2 million cubic meters of panel products worth RM1.7 billion (US$559 million) in the 11 months ended November last year, representing almost half of Sarawak's total exports, AmResearch Sdn Bhd wrote in a report on March 11.

Japan was the second-largest overall importer of Malaysian goods in January and third-largest exporter to the Southeast Asian nation, Maybank Investment Bank Bhd said in a separate report today.

Malaysia may gain from Japan's higher demand for fuel and rebuilding efforts with Japan being a major buy of Malaysia's liquefied natural gas, crude oil, palm oil and timber, Wong Chew Hann, a Maybank analyst, said in the report. -- Bloomberg