Ta Ann’s pure-play status to buffer against timber softness

KUCHING (March 31): Ta Ann Holdings Bhd’s (Ta Ann) plantation arm is set to support the group amidst weakness in timber segment, driven by higher fresh fruit bunch (FFB) growth.

The Sarawakian firm projects its crude palm oil’s (CPO) FFB to grow by 12.6 per cent year on year (y-o-y) to 773,000 tonnes this year, supported by an expanding mature area (2,170 ha) and higher projected FFB yields of 17.14 tonnes per hectare.

Its high FFB growth is set to drive unit cost containment, said analysts with RHB Investment Bank Bhd (RHB Research).

“Ta Ann’s production in the first two months of 2026 (2M26) grew by 7.2 per cent y-o-y, aided by a shift to dry weather versus the prolonged rain seen in early 2025,” it said in its analysis yesterday.

Consequently, RHB Research raised its FFB growth projections for Ta Ann to 4.4-8.2 per cent for FY26-28, from 1.2-7.6 per cent.

“Management expects FY26 unit costs to remain flattish at RM2,000 per tonne, on the back of volume expansion and lower 1H26 fertiliser costs.

“We cut our unit cost assumptions accordingly, by five per cent for FY26 and by two per cent for FY27-FY28.”

The research firm expected that CPO price strength to drive Ta Ann’s earnings further. Year to date, the CPO price has rallied 15.2 per cent, averaging RM4,171 per tonne.

“As a pure planter, Ta Ann is highly sensitive to CPO prices, where every RM100 per tonne change affects earnings by circa 12-15 per cent,” it said.

“Should CPO prices be sustained at the current RM4,500 levels throughout FY26, our earnings estimates would increase by circa 30 per cent.”

Meanwhile, Ta Ann’s timber segment is expected to break even in FY26, on the back of its 2M26 log production surging by 159 per cent due to a low base effect, good weather, and higher logging quota.

RHB Research raised its FY26-27F log output growth to 6.5-9.3 per cent, from minus 0.5-5.3 per cent.

“Ta Ann is diversifying its plywood export footprint. As of January 2026, the geographical mix is split evenly between Japan and Yemen (from 95 per cent to Japan previously).

“Management anticipates strong demand from Yemen, driven by post-conflict reconstruction needs. Hence, we increase our export growth forecasts to 5-12.9 per cent from 2.6-2.9 per cent, for FY26-27.

“To mitigate margin compression, Ta Ann is replacing its aging machineries to reduce overhead costs, as well as engaging with the government for temporary royalty relief.

“Pending further clarity, we maintain our breakeven assumptions for the timber segment.”