PP 7767/09/2010(025354)

Corporate Highlights
Malaysia
RHB Research
Institute Sdn Bhd
A member of the
RHB Banking Group
R e su lts N ot e Company No: 233327 -M

MARKET DATELINE 29 September 2010

Jaya Tiasa Share Price

Fair Value
:
:
RM3.87
RM4.43
Higher Selling Prices Boost Performance Recom : Outperform
(Maintained)

Table 1 : Investment Statistics (JTIASA; Code: 4383) Bloomberg: JT MK

Net Net
FYE Turnover profit EPS Growth PER C.EPS* P/CF P/NTA ROE Gearing GDY
Apr (RMm) (RMm) (sen) (%) (x) (sen) (x) (x) (%) (x) (%)
2009a 746.0 26.6 9.4 91.4 39.3 - (7.2) 0.5 2.4 0.7 0.5
2010a 844.0 72.2 25.6 171.6 14.5 21.0 (7.3) 0.4 6.4 0.7 0.0
2011f 1,067.7 120.5 42.6 66.9 8.7 32.0 10.7 0.4 9.8 0.6 0.0
2012f 1,182.7 137.2 48.6 13.9 7.6 36.0 5.8 0.4 10.1 0.5 0.0
Main Market Listing / Trustee Stock / Syariah-Approved Stock By The SC

RHBRI Vs. Consensus

♦ In line. 1Q FY04/11 net profit of RM22.5m came in at 31% and 40% of our Above
and consensus forecast respectively. We view this to be in line with our In Line
forecast as we expect Jaya Tiasa to record lower net profit in the next few Below
quarters due to the strengthening of RM against US$. We note that the
Issued Capital (m shares) 282.5
sales of its timber products are mainly exported and transacted in US$.
Market Cap (RMm) 1093.3
Daily Trading Vol (m shs) 0.04
♦ Yoy, 1Q FY04/11 revenue increased by 11.6% while net profit jumped to 52wk Price Range (RM) 2.38-3.99
RM22.5m (from RM0.7m in 1QFY04/10) due to: 1) increase in average Major Shareholders: (%)
selling price for logs (7%); 2) better margin for plywood sales due to 16% Tiong Toh Sing Holdings 22.2
reduction in production cost as a result of higher volume; and 3) increase in Genine Sdn Bhd 11.2
sales volume and average selling prices for FFB. Asanas Sdn Bhd 9.4

FYE Apr FY11 FY12 FY13

♦ Qoq, revenue declined by 2% mainly due to the fall in sales volume for log EPS chg (%) - - -
(18%) and plywood (15%). However, net profit jumped to RM22.5m (from Var to Cons (%) 21.7 33.3 34.9
RM9m in previous quarter) as a result of: 1) higher average selling price of
PE Band Chart
logs and plywood; and 2) increase in the sales volume of FFB and crude
palm oil. PER = 20x
PER = 15x
PER = 10x
♦ Future prospects. We believe that Jaya Tiasa’s prospects are looking up, PER = 5x

given improving average selling prices of plywood and Japan housing starts.
Earnings momentum is also supported by still strong demand for logs from
China and India as well as the maturing age profile of Jaya Tiasa’s
plantation.
Relative Performance To FBM KLCI
♦ Risks include: 1) Timber and CPO prices falling; 2) A slower-than-expected
recovery in the global economy; and 3) Significant increase in crude oil-
related glue and logistics costs. Jaya Tiasa

♦ Forecasts. We maintain our forecasts for now.

FBM KLCI
♦ Investment case. We maintain our SOP fair value of RM4.43 based on
unchanged 12x CY11 timber division earnings and 12x CY11 plantation
division earnings (see Table 5). Maintain our Outperform recommendation
on Jaya Tiasa.
Hoe Lee Leng
(603) 92802158
hoe.lee.leng@rhb.com.my
Please read important disclosures at the end of this report.

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 29 September 2010

Table 2. Earnings Review (YoY Cumulative)

FYE Apr (RMm) 1Q10 4Q10 1Q11 QoQ YoY Comments

(%) (%)
Revenue 166.3 189.6 185.5 (2.2) 11.6 Higher revenue yoy mainly due to higher selling prices achieved for
its logs (7%) as well as an increase in FFB production sales volume
(66%) and selling prices (9%).

Qoq, lower revenue due to 18% fall in sales volume of logs and
15% fall in sales volume of plywood.

Operating profit 4.8 19.2 32.6 69.7 582.1 See pretax profit breakdown
Op margin (%) 2.9 10.1 17.6 7.4 14.7
Int exp (2.6) (2.6) (2.5) (3.3) (5.6) Stable

Pre-tax profit 2.1 16.6 30.1 80.9 >100

> Timber (0.9) 13.1 24.3 86.3 >100 Higher average selling of logs and plywood. Also, margin was
better for plywood with 16% reduction in production costs as
volume was higher.
> Reforestation (0.9) (1.4) (0.7) (48.5) (15.2)
> Oil Palm 3.9 5.0 7.4 47.9 87.6 Higher selling prices and also an increase in the sales volume of
Plantation FFB and crude palm oil

Tax (1.4) (7.4) (7.4) 0.6 >100

Eff tax rate (%) 63.2 44.3 24.6 (19.7) (38.6) Slightly lower than statutory tax rate due to utilisation of tax losses
and capital allowance brought forward
Minority interest (0.1) (0.3) (0.2) (19.0) >100
Net profit 0.7 9.0 22.5 >100 >100

EPS (sen) 0.3 3.4 8.4 >100 >100

DPS (sen) 0.0 2.0 0.0 - -
Source: Company, RHBRI

Table 3. Earnings Forecasts Table 4. Forecast Assumptions

FYE Apr (RMm) FY10a FY11F FY12F FY13F FYE Apr FY11F FY12F FY13F

Turnover 746.0 844.0 1067.7 1182.7 Plywood sales volume (000 m3) 252 294 315
Turnover gth (%) -1% 13% 27% 11% Log sales volume (000 m3) 408 410 410
CPO production (000 tonnes) 49 65 92
Cost of Sales (633.2) (655.6) (801.1) (893.1) Plywood price (US$/m3) 430 460 470
Gross Profit 112.8 188.4 266.7 289.6 Log price (US$/m3) 175 175 175
CPO price (RM/t) 2550 2700 2500
EBITDA 125.9 203.3 288.0 313.3
EBITDA margin 17% 24% 27% 26%
(%)

Depreciation (74.8) (97.5) (117.9) (120.8)

Net Interest (9.4) (8.0) (8.0) (8.0)

Pretax Profit 41.7 97.7 162.1 184.5

Tax (14.5) (24.4) (40.5) (46.1)
Minorities (0.7) (1.1) (1.1) (1.1)
Net Profit 26.6 72.2 120.5 137.2
Source: Company data, RHBRI estimates

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 Table 5. Sum-Of-Parts Calculation

CY11 profit PE Total

Timber division 21.1 12 253.6
Plantation 83.3 12 999.0
RNAV 1252.7
Outstanding shares 282.5

Fair value 4.43

Source: RHBRI estimates

IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank
(previously known as RHB Sakura Merchant Bankers). It is for distribution only under such circumstances as may be permitted by applicable law. The opinions
and information contained herein are based on generally available data believed to be reliable and are subject to change without notice, and may differ or be
contrary to opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This report is not to be
construed as an offer, invitation or solicitation to buy or sell the securities covered herein. RHBRI does not warrant the accuracy of anything stated herein in any
manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against RHBRI. RHBRI and/or its associated persons
may from time to time have an interest in the securities mentioned by this report.

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of persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluate
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“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
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services from the companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may not reflect
information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based
upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

The recommendation framework for stocks and sectors are as follows : -

Stock Ratings

Outperform = The stock return is expected to exceed the FBM KLCI benchmark by greater than five percentage points over the next 6-12 months.

Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or more
over a period of three months, but fundamentals are not strong enough to warrant an Outperform call. It is generally for investors who are willing to take on
higher risks.

Market Perform = The stock return is expected to be in line with the FBM KLCI benchmark (+/- five percentage points) over the next 6-12 months.

Underperform = The stock return is expected to underperform the FBM KLCI benchmark by more than five percentage points over the next 6-12 months.

Industry/Sector Ratings

Overweight = Industry expected to outperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Neutral = Industry expected to perform in line with the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Underweight = Industry expected to underperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

RHBRI is a participant of the CMDF-Bursa Research Scheme and will receive compensation for the participation. Additional information on recommended
securities, subject to the duties of confidentiality, will be made available upon request.

This report may not be reproduced or redistributed, in whole or in part, without the written permission of RHBRI and RHBRI accepts no liability whatsoever for the
actions of third parties in this respect.

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