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Indonesia’s moratorium to be big blow for late entrants to plantations

KUCHING: Indonesia’s moratorium on plantation permits will be negative to those who are late entrants in the country’s plantation industry. According to a Reuters article, Indonesia’s government issued a presidential instruction to place a moratorium on new permits for palm plantations for three years, as part of efforts to protect forests, a presidential official said […]


Indonesia’s palm oil move will hit new players

PETALING JAYA: Plantation players who are relatively new in the Indonesian market or those with significant plantable landbank in the country are likely to be impacted negatively by the moratorium on new palm oil development, according to PublicInvest Research.

Indonesia, the world’s largest palm oil producer announced on Friday that it has signed a three-year moratorium on new palm oil plantation development and will review existing plantation permits. The order is aimed at improving the sustainability of palm oil plantations.

The temporary ban is likely to improve productivity of small owners and also help clarify land ownership.

The research house is of the view that given Indonesia’s self-commitment towards the policy, there could be tighter implementation in terms of reviews of plantation permits such as Izin Lokasi (Location Permit), Izin Usaha Perkebunan (Plantation Permit), Hak Guna Usaha (Development rights) across all provinces.

To recap, Indonesia and Norway had inked an US$1billion (RM4.13 billion) agreement for a moratorium on new permits to clear primary forest in a bid to reduce greenhouse gas emissions from deforestation, forest degradation and the destruction of peat – in 2010.

However, studies show that Indonesia failed to reduce its emission from deforestation and forest degradation while more than 9.9 million ha was converted into plantation area overs 2010-2015.

Going forward, moratorium is expected to slow down the production growth of fresh fruit bunch, which in turn will support palm oil prices and ease concerns on oversupply.

The move is also expected bring down the growth of average crude palm oil from 2020 onwards, which was initially projected to grow at 3%.

Indonesia, which accounts for 51.7% of global palm oil production, is expected to see a year-on-year increase of 5.5% to 38.5 million tonnes this year.

Ta Ann Holdings Bhd is the only Malaysian company unlikely to be affected by the policy as it has no exposure in Indonesia.

TSH Resources Bhd, which has close to 90% of its plantation landbank in Indonesia, has already slowed down new plantings (less than 500ha per acre) a few years ago.

Public Invest said yesterday that stocks under its coverage will not be significantly impacted as majority of them have almost fully planted their landbank in Indonesia.

Among the stocks covered by PublicInvest – IOI Corp, Kuala Lumpur Kepong, Sime Darby Plantations were rated as “neutral” while Genting Plantations and Ta Ann received “overweight” ratings.

The Plantation Index of Bursa Malaysia was down 26.77 points or 0.35% to 7,525.42 points.

Pinehill Pacific Bhd, which said it was selling its palm oil estate in Perak for RM413.75 million last week, jumped 22.7% yesterday closing at 54 sen. United Plantation Bhd was the second biggest loser for the day losing 30 sen of its share price to close at RM26.82 a piece.

KLK’s share price shed 0.1% to RM25, with 137,500 shares traded. Ta Ann lost one sen to RM2.73 with 2,600 shares traded.


Analysts: Plantations sector to see strong results in 4Q18

KUCHING: Analysts expect the plantations sector to record strong results in the fourth quarter of 2018 (4Q18) on the back of stronger output in the second half of 2018 (2H18). According to the research arm of Maybank Investment Bank Bhd (Maybank IB Research), between 3Q and 4Q18, earnings will likely peak in 4Q18 on high […]


Toyota recalls one million hybrid cars over technical problem

TOKYO, Sept 5 ― Japanese car giant Toyota today recalled more than one million hybrid cars globally due to a technical problem which could in the worst case cause a fire in the vehicles.  About 1.03 million vehicles built between June 2015…


Corporate earnings in Q2 ‘show some semblance of improvement’

PETALING JAYA: PublicInvest Research said the second-quarter's earnings report card showed some semblance of improvement following the previous quarter's letdown, but the uptick may not be structural in nature.

Positive surprises were evident in the auto and healthcare sectors, while the bleeding in the oil and gas sector seems to have abated. Manufacturing, however, remains a disappointment and airlines also surprised on the downside.

“Of some encouragement is the fact that none of the market-moving economic-defining sectors showed any significant worse for wear,” it said in a research note today.

For PublicInvest Research, the current quarter's earnings hits (above and/or in line) are at 68:32%, versus 60:40% in the first quarter.

With most of the current misses still cost-related, the research house has lowered its expectations again.

“The one encouragement, if any, is that sales trends for most still remain intact albeit muted, while upward revisions are rising slightly.”

As the market is fairly valued currently, PublicInvest Research is maintaining the 2018 year-end target for the FBM KLCI at 1,790 points.

On whether there is a further upside to the market, the research house said the earnings growth assumptions for 2018, 2019 and 2020 are 3.2%, 5.9% and 6.5%, respectively.

“On this score, we are suggesting a preliminary year-end 2019 FBM KLCI target of 1,900 points, though many odds could be stacked against its favour.”

PublicInvest Research is maintaining an “overweight” stance on the oil and gas and manufacturing sectors despite weakness seen in earnings. It also suggests selective exposure in the banking sector.

The research house continues to see value in the small- and mid-cap space, and retain most of its suggested picks despite year-to-date underperformances of some companies as it believes the current share price weaknesses are overdone.

“AMMB Holdings, Hibiscus Petroleum, Mega First, N2N Connect, Perak Transit continue to make up the core holdings in our suggested picks, in addition to CIMB Group and Tenaga Nasional. Ta Ann Holdings is newly included.”

MIDF Research noted that the aggregate reported earnings of FBM KLCI 30 constituents totalled RM11.42 billion in Q2, down 31.2% quarter on quarter and 27.4% year on year.

However, more pertinently, the aggregate normalised sequential growth was positive at +2.7% quarter on quarter while the normalised on-year number posted a much smaller negative at -3.2% year on year.

Within MIDF Research’s universe, merely 3% of stocks under coverage reported higher than expected earnings. Of the rest, 39% posted earnings that were lower than expected versus 58% which came within expectations.

It has trimmed the aggregate FY18 earnings estimate and FY2019 earnings forecast of the FBM KLCI constituents under its coverage by -0.2% to RM55 billion and 0.8% to RM57.2 billion, respectively.
MIDF Research is maintaining its end-2018 FBM KLCI target at 1,800 points.


Equities markets still marred by external uncertainties

KUALA LUMPUR: The extent of the trade war and how it may evolve further will certainly be the main focal point that will plague regional equity markets including Malaysia as fund managers remain on the sidelines and adopt a wait-and-see approach. Generally speaking, the Malaysian equities markets is still marred by the external uncertainties, says […]


Ta Ann’s Certificate for Forest Management award garners neutral views

KUCHING: Ta Ann Holdings Bhd’s (Ta Ann) recent Certificate for Forest Management award has garnered neutral views from analysts given that its earnings impact is likely to be minimal in the near term. In a filing to Bursa Malaysia, Ta Ann announced that the group’s Kapit Forest Management Unit (FMU), managed by wholly-owned subsidiary Tanjong […]


Adventa defers proposed rights issue

PETALING JAYA: Adventa Bhd has deferred its rights issue plan after its major shareholder and managing director Low Chin Guan said he is not in a position to provide an undertaking for the fundraising exercise amid legal proceedings against him by Top Glove Corp Bhd.

“In view of the above, the board resolves to defer the proposed rights issue. Adventa will make further announcements in the event there are material developments,” according to Adventa's filing with Bursa Malaysia.

In a separate announcement, Adventa clarified that the group and its subsidiaries are not involved in the legal proceedings between Low and Top Glove.

Adventa's share price declined 4.5 sen or 8.3% to close at 5 sen today on 430,000 shares done.

Last January, Adventa announced a plan to undertakea a right issue exercise on the basis of three rights shares for every three shares as well as one free warrant for every two rights shares subscribed. The rights issue was to raise RM50.42 million for business expansion and working capital.

The group proposed to procure irrevocable undertakings from Low to subscribe for his rights entitlements and all the remaining rights shares which have not been subscribed. 


Ta Ann’s Kapit FMU attains Forest Management Certificate

KUALA LUMPUR: Ta Ann Holdings Bhd’s Kapit Forest Management Unit (FMU) has been awarded the Certificate for Forest Management (Natural Forest) under the Malaysian Timber Certification Scheme. The Kapit FMU is managed by Tanjong Manis Holdings Sdn Bhd, a wholly-owned unit of Ta Ann. In a filing to Bursa Malaysia yesterday, Ta Ann said the certificate […]


Stormy quarter puts pressure on Ta Ann’s cash flow

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BAD luck and ongoing timber woes are sapping the cash reserves of Ta Ann Holdings Bhd, which paid nearly RM171 million for 30.4% of Sarawak Plantation Bhd (SPLB) earlier this year. In the first quarter ended March 31, 2018, Ta Ann’s cash and cash equivalents fell from RM272.86 million to RM179.85 million, equivalent to 37.2% of its current liabilities. The 0.37 cash ratio is the company’s lowest on a quarterly basis since 2012, according to data compiled by Bloomberg. Its cash and cash equivalents had fallen on a q-o-q basisRead More