JTIASA (4383) - Jaya Tiasa sees silver lining in timber trade
Logs from illegal activities seized at Batang Mukah during crackdown in Sarawak.
Logs from illegal activities seized at Batang Mukah during crackdown in Sarawak.
KUCHING: Sarawak’s tropical log prices are expected to trend higher due to tighter supply brought about by the state authorities’ crackdown on illegal logging and smuggling activities and continued robust demand by foreign buyers.
Jaya Tiasa Holdings Bhd’s senior manager (sales and marketing) Woung Lik Chiong said the supply from Sarawak may be halved as a result of the government crackdown. Large quantities have been confiscated the last six months.
Jaya Tiasa is one of Malaysia’s most established timber companies, with a concession area of 713,200ha. Woung said the company has yet to source from its 31,000ha of forest plantations, which is expected to provide yields several times higher than natural forests.
The story of Sarawak timber came under the spotlight last year when authorities mounted 210 raids and seized illicit logs measuring 82,327 cu m valued at RM41mil. This was more than a six-fold increase from the 11,216 cu m (worth RM5.6mil) seized in 2013. In the first two months of this year, some 15,655 illegal logs worth RM5.9mil were confiscated.
To underscore the seriousness of illegal logging, Tan Sri Adenan Satem marked his first anniversary as Sarawak Chief Minister with almost daily seizures of illegally-sourced logs. He also cancelled or declined renewals of about half of the 150 Occupation Tickets (OTs) that allow their holders to extract timber for plantation projects.
He cited the abuse of OTs – stealing timber from national parks, mangrove forests and permanent forest reserves – as the reason. Adenan also ordered forest authorities last week to cut off routes used by illegal loggers after learning that they were sending illegally sourced logs direct from interior timber camps to ships in the South China Sea.
However, Woung remains “optimistic” about the timber sector despite Sarawak’s log production having taken a tumble over the last three years. It dropped 13% to 8.21 million cu m in 2013 (2012: 9.46 million, 2011: 10.2 million cu m). Last year’s figures are not available.
The Myanmar ban on log exports last April also contributed to the global drop in supply, which pushed up the prices of tropical logs.
Woung said log prices for the Indian market, the largest buyer of Sarawak logs, had surged by between US$20 and US$25 per cu m over a 12-month period.
India, which accounted for more than two-thirds of Sarawak’s export volume, was a stable market, said Woung. Although some foreign buyers are seeking new sources from the Solomon Islands, Papua New Guinea and Africa, Sarawak remains a key source because of its strategic location. Escalating prices and a weak ringgit have been a boon.
Besides Jaya Tiasa, other timber companies include WTK Holdings Bhd and Ta Ann Holdings Bhd. All Sibu-based, they have diversified into oil palm cultivation and forest plantations.
In the second quarter ended Dec 31, 2014, Jaya Tiasa’s pre-tax profit from log sales rose to RM46.5mil from RM40.3mil a year ago. Revenue climbed to RM189.9mil from RM170.1mil. In the financial year ended June 30, 2014, Jaya Tiasa produced 1.1 million cu m of logs, with a monthly extraction quota of 94,500 cu m.
Last year, WTK recorded a 14.2% increase in average selling prices, while the sales volume leapt by 12.5%, boosting its timber segment’s pre-tax profit to RM47.4mil from RM35.5mil in 2013. This was an increase of RM11.9mil, or 30%, despite a lower revenue of RM546mil from RM563mil. WTK exported 66% of its logs to India.
Similarly, Ta Ann’s average log selling price last year surged 16%, while export volume expanded by 19% over 2013. The sales volume and average selling price of plywood improved by 6% and 7%, respectively, in 2014. Ta Ann group’s pre-tax profit from the timber business more than doubled to RM100.2mil in 2014 from RM48.5mil a year ago.
“The uptrend is expected to continue this year with sustained demand from India and plywood products demand from Japan,” said Ta Ann in the notes to its yearly financials. Japan is Sarawak’s largest buyer of plywood.
http://www.thestar.com.my
Logs from illegal activities seized at Batang Mukah during crackdown in Sarawak.
Logs from illegal activities seized at Batang Mukah during crackdown in Sarawak.
KUCHING: Sarawak’s tropical log prices are expected to trend higher due to tighter supply brought about by the state authorities’ crackdown on illegal logging and smuggling activities and continued robust demand by foreign buyers.
Jaya Tiasa Holdings Bhd’s senior manager (sales and marketing) Woung Lik Chiong said the supply from Sarawak may be halved as a result of the government crackdown. Large quantities have been confiscated the last six months.
Jaya Tiasa is one of Malaysia’s most established timber companies, with a concession area of 713,200ha. Woung said the company has yet to source from its 31,000ha of forest plantations, which is expected to provide yields several times higher than natural forests.
The story of Sarawak timber came under the spotlight last year when authorities mounted 210 raids and seized illicit logs measuring 82,327 cu m valued at RM41mil. This was more than a six-fold increase from the 11,216 cu m (worth RM5.6mil) seized in 2013. In the first two months of this year, some 15,655 illegal logs worth RM5.9mil were confiscated.
To underscore the seriousness of illegal logging, Tan Sri Adenan Satem marked his first anniversary as Sarawak Chief Minister with almost daily seizures of illegally-sourced logs. He also cancelled or declined renewals of about half of the 150 Occupation Tickets (OTs) that allow their holders to extract timber for plantation projects.
He cited the abuse of OTs – stealing timber from national parks, mangrove forests and permanent forest reserves – as the reason. Adenan also ordered forest authorities last week to cut off routes used by illegal loggers after learning that they were sending illegally sourced logs direct from interior timber camps to ships in the South China Sea.
However, Woung remains “optimistic” about the timber sector despite Sarawak’s log production having taken a tumble over the last three years. It dropped 13% to 8.21 million cu m in 2013 (2012: 9.46 million, 2011: 10.2 million cu m). Last year’s figures are not available.
The Myanmar ban on log exports last April also contributed to the global drop in supply, which pushed up the prices of tropical logs.
Woung said log prices for the Indian market, the largest buyer of Sarawak logs, had surged by between US$20 and US$25 per cu m over a 12-month period.
India, which accounted for more than two-thirds of Sarawak’s export volume, was a stable market, said Woung. Although some foreign buyers are seeking new sources from the Solomon Islands, Papua New Guinea and Africa, Sarawak remains a key source because of its strategic location. Escalating prices and a weak ringgit have been a boon.
Besides Jaya Tiasa, other timber companies include WTK Holdings Bhd and Ta Ann Holdings Bhd. All Sibu-based, they have diversified into oil palm cultivation and forest plantations.
In the second quarter ended Dec 31, 2014, Jaya Tiasa’s pre-tax profit from log sales rose to RM46.5mil from RM40.3mil a year ago. Revenue climbed to RM189.9mil from RM170.1mil. In the financial year ended June 30, 2014, Jaya Tiasa produced 1.1 million cu m of logs, with a monthly extraction quota of 94,500 cu m.
Last year, WTK recorded a 14.2% increase in average selling prices, while the sales volume leapt by 12.5%, boosting its timber segment’s pre-tax profit to RM47.4mil from RM35.5mil in 2013. This was an increase of RM11.9mil, or 30%, despite a lower revenue of RM546mil from RM563mil. WTK exported 66% of its logs to India.
Similarly, Ta Ann’s average log selling price last year surged 16%, while export volume expanded by 19% over 2013. The sales volume and average selling price of plywood improved by 6% and 7%, respectively, in 2014. Ta Ann group’s pre-tax profit from the timber business more than doubled to RM100.2mil in 2014 from RM48.5mil a year ago.
“The uptrend is expected to continue this year with sustained demand from India and plywood products demand from Japan,” said Ta Ann in the notes to its yearly financials. Japan is Sarawak’s largest buyer of plywood.
http://www.thestar.com.my
