TAANN (5012): Timber Turnaround Still Elusive as CPO Volatility Persists
Summary (TL;DR):
- Research Firm: RHB Investment Bank
- Subject: TAANN / TAANN (5012)
- Core Rating: NEUTRAL
- Target Price / Top Picks: MYR 3.60
- One-Liner: RHB maintains a Neutral stance on Ta Ann, anticipating a fundamentally more balanced 2026 with volatile CPO prices and a timber segment expected to remain at breakeven.
Report at a Glance
RHB Investment Bank released its latest research report on TAANN on 2025-07-09, maintaining a “NEUTRAL“ rating with a target price of MYR 3.60. The core thesis of the report is that while 2026 is expected to be a more balanced year fundamentally with lower year-on-year CPO prices, geopolitical risks will continue to drive price volatility. The timber segment is still projected to remain at a breakeven level for FY25F.
Investment Thesis (The Bull Case)
- Point 1: The company’s attractive 8% FY26F dividend yield is expected to provide support to its share price.
- Point 2: Anticipated growth in Fresh Fruit Bunch (FFB) processing capacity driven by its new oil mill.
- Point 3 / Key Beneficiaries: Potential for an increase in log export volumes, contributing positively to the timber segment.
Potential Risks (The Bear Case)
- Risk 1: Continued volatility in CPO prices, significantly influenced by ever-changing geopolitical situations and crude oil prices.
- Risk 2: Adverse weather conditions, which could negatively impact palm oil production and overall agricultural output.
- Risk 3: Unfavorable demand and supply dynamics within the timber industry, hindering a segment turnaround.
Financial Forecast Summary
The analyst’s financial projections for the coming years are as follows:
| Fiscal Year (YE to Dec) | FY25F | FY26F | FY27F |
|---|---|---|---|
| Revenue (RM mil) | 1,622 | 1,626 | 1,684 |
| Net Profit (RM mil) | 178 | 174 | 179 |
| EPS (sen) | 41 | 39 | 41 |
| DPS (sen) | 32 | 30 | 32 |
| Dividend Yield (%) | 8.4 | 7.9 | 8.4 |
| P/E Ratio (x) | 9.38 | 9.63 | 9.36 |
(Source: RHB Investment Bank research report)
Valuation & Target Price
| Rating | NEUTRAL |
| Last Close Price | MYR 3.80 |
| Target Price (TP) | MYR 3.60 |
| Valuation Methodology | The target price is derived by applying an unchanged 11x P/E multiple on the Dec-2026F earnings, aligning with the valuation of its small-cap peers. |
Analyst’s Conclusion
- Overall Stance: RHB Investment Bank maintains a “NEUTRAL” rating on Ta Ann, expecting a more balanced fundamental year in 2026, though with continued CPO price volatility and a stagnant timber segment.
- Key Catalyst/Strength: The company’s attractive FY26F dividend yield of 8% is seen as a key factor providing support for its share price.
- Major Headwind/Risk: Persistent CPO price volatility driven by geopolitical risks, coupled with the timber division’s struggle to move beyond a breakeven level, remain significant headwinds.
- What to Watch: Investors should monitor global geopolitical developments for their impact on CPO prices, as well as the progress in FFB processing capacity and log export volumes.
Disclaimer: This article is a summary and interpretation of a research report published by RHB Investment Bank on 2025-07-09. All information is for reference purposes only and does not constitute investment advice. Investors should conduct their own independent research and due diligence and assume all associated risks.
