|The Edge FD Top Pick 2017|
After a year of lacklustre performance, Sarawak-based Ta Ann Holdings Bhd is set to benefit from the improved demand for timber as well as the turnaround in the plantation sector. The company has been chosen by Kenanga Research, AffinHwang Capital and Public Investment Bank Research as their stock picks for 2017 in their latest strategy reports.
KAF Investment Bank chief investment officer Gan Kong Yik likes Ta Ann as he is upbeat about the plantation sector in 2017 with crude palm oil (CPO) price expected to be firmer.
Furthermore, the demand for timber is anticipated to increase in 2017.
Another plus point for Ta Ann is that it is seen as a beneficiary from the stronger US dollar.
In a strategy note dated Jan 4, Kenanga Research expects Ta Ann to be “a double beneficiary of the sharp CPO price appreciation, as well as stronger US dollar” as the company exports nearly all of its timber products, and sales are denominated in US dollars while costs are entirely in ringgit terms.
It also likes Ta Ann for its sector-leading dividend yield of 3.8% against the average 2.4%.
The consensus 12-month target price for Ta Ann is at RM4.38. Six out of nine research houses covering the stock have given it a “buy” call.
The integrated timber producer did not perform well in 2016, falling 5.5% over the past year, underperforming the benchmark FBM KLCI, which declined by 3%. — By Yimie Yong