• FY23 core net profit of RM184m (ex-EI) was above our expectations but in line with Bloomberg consensus at 112% and 103%, respectively.

• 4QFY23 core net profit (ex-EI) fell 16% yoy due to weaker average selling prices for plywood products, CPO and FFB.

• Reiterate Add with a GGM TP of RM4.53. We think current valuations are undemanding given its net cash balance sheet and 5-6% dividend yield.

FY23 results above; attractive dividend yield at 6.8%

• Ta Ann ’s FY23 core net profit of RM184m (excluding FV loss on biological assets and other non-core items) was above our expectations at 112% of our forecast (in line with

• FY23 core net profit fell by 47% yoy, primarily due to lower average selling prices for

• 4QFY23 core net profit of RM53m (ex-EI) decreased by 16% yoy due to weaker average selling price for plywood products (-27% yoy), CPO (-8% yoy), and FFB (-8% yoy).

• A surprise higher DPS of 15 sen was declared in 4Q23 (4Q22: 10 sen), bringing total DPS in FY23 to 25 sen (FY22: 40 sen), above our and Bloomberg consensus’ estimates of 19 sen and 24 sen, respectively. FY23 DPS of 25 sen translates to a payout of 70% of its net profit and 6.8% yield at the current share price.

Reiterate Add, with an unchanged GGM-derived TP of RM4.53

• We maintain our FY24-25F earnings forecasts and await more clarity from management. Nevertheless, we anticipate Ta Ann ’s net profit to rebound in FY24-25F by 19-29%, driven by higher sales volume for both plantation and timber segments and improvement

• Our Add recommendation on Ta Ann remains unchanged, with GGM-derived TP of RM4.53, implying 12x CY24F P/E. We think its current valuation, trading at just 9x 2024F P/E, is undemanding and attractive given its healthy net cash balance sheet and decent dividend yields of 5-6% for FY24F.

• Potential catalysts are a recovery in timber prices and sustained healthy dividend payout rates. Downside risks are lower-than-expected average CPO price and production, higher production costs, slower growth within its property segment and negative government policies from palm oil importing countries which could impact its net profit.

Source: CGS-CIMB Research - 29 Feb 2024