JTIASA (4383) - My Number 1 Pick from ColdEye!

JTIASA (4383) - My Number 1 Pick from ColdEye!

Jaya Tiasa (Target Price RM2.33)

Superb earnings growth of 40% CAGR from FY16-18! 
  • A young planter comes to the fore and slated for strong long term growth. 
  • According to Bloomberg, JTIASA’s earnings is expected to register a solid 40% CAGR from FY16-18, spurred by 
    • 1) rising primed mature estate areas under the group’s planted areas of ~69,500 ha (FY12: 58k ha); 
    • 2) young average palm tree age profile of approximately 7 years over 64% in FY17-18 (FY16: 54%); 
    • 3) improving FFB and CPO production amid rising yields and 
    • 4) benefiting from strong FCPO prices. 

  • Overall, the bullish palm-oil division’s contribution will anchor future earnings growth for the group, offsetting the weakness in timber division, mainly due to lower timber product prices and production amid the stringent environmental safeguards and the diminishing natural resources in Malaysian forests.

  • Undemanding valuations. JTIASA is trading at 14.1x P/E, which is 7% below its peers P/E of 15.4x, supported by a robust FY16-18 earnings CAGR of 40%. 

  • In terms of P/B, current valuation of 0.72x is trading at a huge 55% discount to its peers 1.55x.

  • At 20% discount to its peers, fair value for JTIASA is RM2.33!

FCPO price at 3-year high RM2,893! Breaking RM3,000 very soon!

JTIASA (4383) - My Number 1 Pick from ColdEye!