Tsh Resources Berhad

$TSH / 9059 (TSH RESOURCES BERHAD)
Research by TA

$TSH / 9059 (TSH RESOURCES BERHAD)
Research by RHB

$TSH / 9059 (TSH RESOURCES BERHAD)
Research by MAYBANK

$TSH / 9059 (TSH RESOURCES BERHAD)
Research by KENANGA

$TSH / 9059 (TSH RESOURCES BERHAD)
Research by HLIB

$TSH / 9059 (TSH RESOURCES BERHAD)
Research by TA
Sell - TP RM1.07

"Lack of Major Catalyst"

Post the earnings adjustment, we have lowered TSH’s TP to RM1.07 (previously RM1.22), based on CY25 PER of 16x. Maintain Sell.

Analyst:
Angeline Chin
angelinechin@ta.com.my

$TSH / 9059 (TSH RESOURCES BERHAD)
Research by RHB
Neutral - TP RM1.10

"Solid QoQ Earnings Growth"

Maintain NEUTRAL, lower MYR1.10 TP (from MYR1.40), 4% downside. TSH Resources’ 1H24 core profit came in above Street’s estimates. While we expect FY24 earnings to strengthen YoY as production improves and unit costs moderate, valuation remains high, with the stock trading at 13.3x FY25F P/E, at the high end of its peers’ range of 6-13x.

Analyst:
Hoe Lee Leng
hoe.lee.leng@rhbgroup.com

$TSH / 9059 (TSH RESOURCES BERHAD)
Research by MIDF
Neutral - TP RM1.19

"Within Expectations"

• Within Expectations
• Plantation profit grew double digit growth
• Others segment losses narrower
• Earnings forecast maintained
• Maintain NEUTRAL with a revised TP of RM1.19

Analyst:
MIDF Research Team
research@midf.com.my

$TSH / 9059 (TSH RESOURCES BERHAD)
Research by Maybank
Hold - TP RM1.15

"2Q headline profit watered down by one-off depreciation"

2Q24 core PATMI nearly doubled from a year ago on higher ASPs and lower cost, which offset weaker output. 2H24 earnings will likely be better HoH especially in 4Q on output recovery and lower cost. Following our earnings revisions, we upgrade TSH to a HOLD (from SELL) with a new TP of MYR1.15 on higher PER peg of 12x FY24E, -0.75SD of 5Y mean (from MYR1.00 on 11x PER). A slightly higher peg is warranted due to stabilised CPO price and its improving financials with net cash position forecasted by year-end. We prefer SOP MK (BUY, CP: MYR2.78, TP: MYR3.18).

Analyst:
Ong Chee Ting, CA
ct.ong@maybank-ib.com

$TSH / 9059 (TSH RESOURCES BERHAD)
Research by Kenanga
Outperform - TP RM1.30

"Firm Earnings Outlook"

TSH’s 1HFY24 results met both Kenanga and street expectations. FFB output was weaker but CPO and PK prices performed better YoY while cost eased. Margins were mixed due to lumpy depreciation charges after the remaining NE Kalimantan land sale was aborted. We revise down FY24-25F net profit forecasts slightly on margin adjustments, but maintain our TP at RM1.30 and OUTPERFORM call.

Analyst:
Khoo Teng Chuan
khootc@kenanga.com.my

$TSH / 9059 (TSH RESOURCES BERHAD)
Research by HLIB
Hold - TP RM1.11

"Another strong showing"

2Q24 core net profit of RM37.7m (+66.0% QoQ; 2.5x YoY) took 1H24’s total sum to RM60.4m (3.5x of 2H23). The results beat expectations, accounting for 61.5-61.7% of consensus and our full-year estimates), due mainly to lower-than-expected CPO production and finance costs. We raise our FY24/25/26 core net profit forecasts 13.3%/10.9%/12.3%, mainly to account for lower CPO production cost and finance cost assumptions. Post earnings revision, we raise our TP on TSH to RM1.11 (from RM1.00 earlier) based on 15x revised FY25 core EPS of 7.4 sen. Upgrade to HOLD (from Sell).

Analyst:
Chye Wen Fei
wfchye@hlib.hongleong.com.my

$TSH / 9059 (TSH RESOURCES BERHAD)

$TSH / 9059 (TSH RESOURCES BERHAD)
Research by Kenanga
Outperform - RM1.30

"Aborts Kalimantan Land Disposal"

TSH has aborted the disposal of 5,398 ha of plantation in NE Kalimantan, Indonesia. This was the second of a two-tranche disposal of a 13,898-ha oil palm plantation. As its balance sheet strength has significantly improved over the last two years, we deem the disposal no longer necessary to de-gear. We maintain our forecasts, TP of RM1.30 and OUTPERFORM call.

Analyst:
Khoo Teng Chuan
khootc@kenanga.com.my

@realalvinang collectively, there are a bunch of reasons why and I think you covered some of the main ones. However, zoom in a bit from just a "plantation sector" into "selected plantation companies" and you might find some that are performing very well indeed.

For better or for worse, a lot of the "largest cap" plantation companies are no longer pure planters, but instead more like conglomerates including sime darby, ioi, klk, genp, and so on, with arms in solar, property, oleochems, etc. With them being so big cap, they carry the highest weightage in the plantation index.

Focusing on more pure planters, for example $UTDPLT / 2089 (UNITED PLANTATIONS BERHAD) , $KMLOONG / 5027 (KIM LOONG RESOURCES BERHAD) $TAANN / 5012 (TA ANN HOLDINGS BERHAD) $JTIASA / 4383 (JAYA TIASA HOLDINGS BHD) $TSH / 9059 (TSH RESOURCES BERHAD) , you would see that their share price gains range from amazing to not too bad in the recent few years.

What happened with utdplt, compared to the rest? And which other company could potentially replicate what utdplt has done in the past few years? I think that's worth studying.

PLANTATION
$TSH / 9059 (TSH RESOURCES BERHAD) $UMCCA / 2593 (UNITED MALACCA BERHAD) $PPB / 4065 (PPB GROUP BERHAD)
Research by Kenanga
Neutral

“Inventory Pick-up On Weak Exports”

MPOB-reported palm oil production of 1.615m MT (-5% MoM, +12% YoY) for June 2024 was a tad above the 10-year average level, and within market estimate but 6% poorer than Kenanga’s estimate. However, poorer exports of 1.205m MT came in slightly (3%) below market and 13% lower than our expectation which led to higher QoQ and YoY closing inventory.

Analyst(s):
Teh Kian Yeong
tehky@kenanga.com.my

PLANTATION
$KLK / 2445 (KUALA LUMPUR KEPONG BERHAD) $TSH / 9059 (TSH RESOURCES BERHAD)
Research by TA
Neutral

“Growing Inventories and La Nina Concerns”

We reiterate our Neutral recommendation for the Plantation sector. No change to our 2024 average CPO price estimate of RM4,000 per tonne and RM3,800 for 2025. We would review our assumptions if: 1) South America's soybean supply turns out to be lower than market expectations, 2) a more promising demand recovery story, 3) lower-than-expected palm oil production, and 4) significant reductions in production costs.

Analyst(s):
Angeline Chin
angelinechin@ta.com.my

MONTHLY PRODUCTION FIGURES (MINING / PLANTATION / TIMBER)

PLANTATION
$PPB / 4065 (PPB GROUP BERHAD) $TSH / 9059 (TSH RESOURCES BERHAD) $UMCCA / 2593 (UNITED MALACCA BERHAD)
Research by Kenanga
Neutral

“1QCY24 Results Review: A Patience Game”

1QCY24 plantation sector earnings were muted. Downstream continued to disappoint which dampened earnings of all three big integrated players, SDG (formerly SIMEPLT), IOI, and KLK. Upstream earnings held better on easier costs and firm CPO prices: thus, smaller, more upstreamcentric players fared better. Meanwhile, SDG’s solar farming plans highlight a lucrative alternative land use for the sector but limited sector-wide impact is expected as many planters are likely to stay oil palm-centric. Maintain NEUTRAL. PBV of 1.1x is not demanding but there is no strong upside catalyst. Higher CPO would be such a catalyst but supply-demand scenario suggests firm rather than bullish CPO prices ahead. We continue to prefer players with the ability and/or flexibility to grow such as PPB (OP; TP: RM17.50), TSH (OP; TP: RM1.30), and UMCCA (OP; RM6.00).

Analyst(s):
Teh Kian Yeong
tehky@kenanga.com.my

PLANTATION
$KIMLUN / 5171 (KIMLUN CORPORATION BERHAD) $IOICORP / 1961 (IOI CORPORATION BERHAD) $TSH / 9059 (TSH RESOURCES BERHAD) $KLK / 2445 (KUALA LUMPUR KEPONG BERHAD)
Research by TA
Neutral

“Stockpile Rose Marginally in May”

The Malaysia Palm Oil Board (MPOB) announced a second consecutive month of increase in palm oil stockpiles to 1.75mn tonnes in May, which was consistent with market forecasts. Production was robust at 1.70mn tonnes (+13.5% MoM), exceeding expectations. Exports, on the other hand, climbed by 11.7% MoM to 1.38mn tonnes, but was lower than expected. Imports fell by 40.3% MoM, totalling 20.76k tonnes, while domestic consumption increased by 25.2% to 338.09k tonnes.

Analyst(s):
Angeline Chin
angelinechin@ta.com.my

TSH Resources Bhd’s prospects remain promising, supported by steady crude palm oil (CPO) prices this year.

$TSH / 9059 (TSH RESOURCES BERHAD)
Research by MIDF
Neutral – TP of MYR 1.18

“Plantation Profit Relatively Unchanged”

Maintain NEUTRAL. While TSH operates primarily as a pure upstream player with a strong correlation to CPO price movements, its share price does not necessarily reflect significant fluctuations unless there are notable developments that capable of influencing CPO prices above the RM4,500/Mt resistance level such as in FY22. Hence, we are maintaining our NEUTRAL call with unchanged TP of RM1.18 based on PER of 14.7x - nearly 5y avg mean by pegging FY24F EPS of 8.0sen.

Analyst(s):
MIDF Research Team
research@midf.com.my

$TSH / 9059 (TSH RESOURCES BERHAD)
Research by Kenanga
Outperform – TP of MYR 1.30

“Firm Earnings Outlook”

TSH’s 1QFY24 results met our forecast but disappointed the market. While its FFB output and average CPO price realised were flattish, Its 1QFY24 core net profit surged multiple times YoY from a low base last year. We fine-tune down our FY24-25F net profit forecasts by 4% and 1%, respectively, but keep our TP of RM1.30 and OUTPERFORM call.

Analyst(s):
Teh Kian Yeong
tehky@kenanga.com.my

$TSH / 9059 (TSH RESOURCES BERHAD)
Research by HLIB
Hold – TP of MYR 1.07

“A decent start to FY24”

1Q24 core net profit of RM22.7m (-13.8% QoQ; 11.3x YoY) accounted for 17.3- 20.4% of consensus and our full-year estimates. We consider the results within our expectation (but below consensus), as we anticipate seasonally stronger FFB output to drive earnings in subsequent quarters. Maintain earnings forecasts, TP of RM1.07 (based on unchanged 15x FY24 core EPS of 7.1 sen), and HOLD rating.

Analyst(s):
Chye Wen Fei
wfchye@hlib.hongleong.com.my

$TSH / 9059 (TSH RESOURCES BERHAD)
Research by PIB
Neutral - TP of MYR 1.02

“Ceasing Coverage”

TSH Resources reported a headline 1QFY24 net profit of RM25.2m (YoY: - 33.6%), mainly dragged by lower FFB production and losses from other segment. No dividend was declared for the quarter. Management expects CPO prices to hover at current level of RM3,800/mt while FFB production is expected to stay flattish this year. Given limited growth drivers amid sluggish FFB yields expected, we are ceasing coverage on TSH as we also redeploy our internal resources to broaden coverage on other sectors. Our last call on the stock is Neutral with a TP of RM1.02.

Analyst(s):
Chong Hoe Leong
chonghoeleong@publicinvestbank.com.my

$TSH / 9059 (TSH RESOURCES BERHAD)
Research by Maybank
Sell – TP of MYR 1.00

“1Q24: Off to a decent start”

1Q24 core PATMI was off to a decent start which met our/consensus expectations. Earnings are likely to play catch up in 2H24 on seasonally stronger FFB output. We make no change to our earnings forecasts. TP is kept at MYR1.00 on 11x FY24E PER, -1SD of 5Y mean. TSH remains a SELL due to a lack of short term catalyst. We prefer SOP MK (BUY, CP: MYR2.94, TP: MYR3.18).

Analyst(s):
Ong Chee Ting, CA
ct.ong@maybank-ib.com

$TSH / 9059 (TSH RESOURCES BERHAD)
Research by TA
Buy – TP of MYR 1.37

“Planned Expansion with Stronger Balance Sheet ”

TSH’s 1QFY24 results came in within market expectations. Stripping out disposal gain and other exceptional items, 1QFY24 core net profit surged to RM22.7mn. The commendable results were mainly attributable to reduced losses from JVs and lower finance costs

Analyst(s):
Angeline Chin
angelinechin@ta.com.my

KUALA LUMPUR: Public Investment Bank (PublicInvest) is ceasing its coverage of TSH Resources Bhd due to the company’s limited growth prospects and sluggish fresh-fruit bunches (FFB) yield.

© New Straits Times Press (M) Bhd

PETALING JAYA: TSH Resources Bhd will seek strategic opportunities within the green and sustainable segment to complement its long-term shareholder value enhancement initiatives.

PETALING JAYA: TSH Resources Bhd will seek strategic opportunities within the green/ sustainable segment to complement its long term shareholder value enhancement initiatives.

General Meetings: Outcome of Meeting