Ta Ann eyes record FFB production as plantations raise earnings growth

KUCHING (March 25): Sarawak-based timber and plantation group Ta Ann Holdings Bhd (Ta Ann) is setting its sights on record fresh fruit bunch (FFB) production growth of 7.5 per cent over the next five years, supported by expanding mature plantation areas and improving yields.

According to a research note by analysts from Public Investment Bank Bhd (PublicInvest Research), Ta Ann’s management aims to reach an FFB yield to 22.11 metric tonnes (MT) per hectare (ha) by 2030, significantly higher than the 16.95 MT per ha recorded in 2025.

The group is poised to meet these targets as its 2025 FFB production has rebounded to a three per cent year-on-year (y-o-y) growth to 686,538 MT, the highest level since 2022. The improvement was driven mainly by higher yields, which increased from 15.95 MT per ha in 2024 to 16.95 MT per ha in 2025.

Additionally, the group’s oil extraction rates (OER) also rose to 20.1 per cent during the year, the highest level since 2018.

For 2026, TA Ann has guided that its FFB production will grow at about 13 per cent year-on-year, supported by an additional 2,170 ha of newly matured areas.

“A new palm oil mill with a capacity of 45 MT per ha is set to be commercially operational in 2028, which will see FFB processed increasing to 1.9 million MT from FY25’s 1.5 million MT,” added the analyst.

As of end-2025, Ta Ann had a total planted area of 48,257 hectares, with mature estates accounting for about 89 per cent of the land bank.

The group’s estates have an average age of 13 years, suggesting the group will continue its aggressive replanting programme in the coming years.

And while there is concern regarding fertiliser price increases due to the Middle East conflict, Ta Ann’s is expected to be moderately insulated as they have secured fertiliser supplies through to the second half of the year (2H26).

Meanwhile, the group’s timber business did not fare as well even though its log and plywood production managed to recover by 13.3 per cent y-o-y and 29 per cent y-o-y, respectively.

During the year, log and plywood selling prices fell by 2.4 per cent 10 per cent, respectively.

“This was mainly due to the US dollar’s depreciation and the weaker yen, which also affected purchasing power in Japan,” the analyst explained.

For the year ahead, PublicInvest Research cautioned that its timber business could face yet another challenging year as Ta Ann’s log production is projected to fall by -17 per cent y-o-y and the effects of this is expected to be exacerbated by continued unfavourable currency translation in USD/MYR.

Nevertheless, to mitigate its heavy dependence on the Japanese market, the group has diversified its plywood exports to Yemen as demand for building materials rises following regional conflicts.

“Despite the challenging outlook, management has vowed to stay in business and is currently in talks with the state government to lobby for a reduction in royalties.

“It also plans to replace all the ageing bulldozers, which would result in significant savings in manpower and spare parts costs,” said the analyst.

In view of the stronger-than-expected FFB growth guidance from Ta Ann and an upwards earnings revision for the group’s 29.4 per cent owned Sarawak Plantation Bhd, PublicInvest Research has opted to upgrade their FY26 to FY28 earnings forecast by 11 to 21 per cent.

Their new core net profit (CNP) forecasts for Ta Ann are RM244.2 million for FY26, RM251.2 million for FY27, and RM283.8 million for FY28. This translates to a three-year compound annual growth rate (CAGR) of 7.9 per cent.

Consequently, they raise their target price from RM5.64 to RM6.42, which implies a potential upside of circa 28 per cent from Ta Ann’s share price of RM5.01 as of closing on March 24.

The analyst also maintained an ‘outperform’ rating for plantation and timber player as they noted that Ta Ann is currently trading below a 10-times forward price-to-earnings multiple.

PublicInvest Research stressed that they view this valuation as “unjustifiable” given the recent stronger crude palm oil (CPO) movements and Ta Ann’s attractive dividend yield of 8 per cent which is one of the highest amongst Malaysian stocks.

Overall, the analyst believed the group’s strengthening plantation operations, improving yield profile and attractive dividend returns could continue to underpin investor interest, even as its timber business navigates a more challenging global demand environment.