JTIASA–Fundamental Analysis (22 May 2014)

JTIASA Analysis:-

Excel – http://1drv.ms/1jxdWw4

My View:-

– Fair value
  – Absolute EY%: Buy below 3.35, sell above 6.18 (MOS: 56%)
  – Analysts’ forecast JTIASA may be able to achieve 0.12 and 0.22 EPS for FY14 and FY15. However, based on performance of 2 quarters of FY14, the cumulative EPS is 0.04. I am not sure JTIASA can even achieve 0.10 EPS by the end of FY14. So, for absolute EY%, I discounted the analysts’ forecast to 0.10 (FY16) and 0.15 (FY15).
– The CPO price moves in a cyclical manner. JTIASA earnings will improve in the next few years.
– In terms of productivity, costs, efficiency and financial health, KMLOONG outplayed JTIASA. JTIASA may have greater potential but KMLOONG’s future prospect is not bad.
  – Being a leader of the timber and plywood industry, it has not been showing much profit because they have used the cash from the timber business to plant oil palms. It started planting oil palms in 2002 aggressively and the following tables show the planted area and it’s FFB production.
  – The total planted area and the FFB production have been increasing rapidly since 2005. The palms are physically growing and producing more and more fruits every year.
  – Their current FFB yield is not optimum because most of the palms are young. Their FFB yield will improve when their immature trees become mature.
– After three quarters in FY14, if compare to last FY results, JTIASA still has 27.6% to catch up. I am not sure whether JTIASA can catch up more than 27% in the last quarter. Chances are slim. On the other hand, JTIASA’s net profit already exceed last year’s net profit.
– I believe JTIASA will continue to bullish.

Latest Financial – Q3 2014 Financial Report (21 May 2014) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1628169

At the time of writing, I did not own shares of JTIASA.

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