Acquisition encounters hurdles. Separately, the deadline for offer acceptance in relation to TSH's bid to acquire Pontian has been extended again, this time to 10 Sept, after being postponed to 22 Aug from 7 Aug previously. The acceptance level to date stands at a low 1.1% of Pontian's shares outstanding (or 1.4% of the shares that TSH and the joint offerors do not hold). We believe the half-cash, half-stock offer - priced at a 10.9x FY11 PER - may have been delayed due to: i) the pricing of the offer, and ii) the sheer number of shareholders in Pontian - at 197 shareholders - which by itself will prolong the acceptance process. We had previously estimated for TSH's FY13 EPS to increase by 9.8% should the offer be accepted as it is. That said, we have yet to incorporate any contributions from the proposed acquisition, pending confirmation of the RM624.8m purchase.

Maintain BUY. We are trimming our FY12 production growth forecast to 8.1% (Sabah: -18.4%, Indonesia: +22.5%) from 18.2% previously, as well as reduced TSH's associate contribution amid a challenging operating environment for its JV refinery with Wilmar in Sabah. Our FY12 and FY13 earnings forecasts are correspondingly cut by 19.2% and 5.5% respectively. Our FV is now lower at RM2.88, based on a 15.0x FY13 PER and a RM0.15 per share value for its non-producing rubber estates.

Source: OSK