TAANN (5012): Navigating Volatility with a Breakeven Timber Segment
Summary (TL;DR):
- Research Firm: RHB Investment Bank
- Subject: TAANN / TAANN (5012)
- Core Rating: HOLD
- Target Price / Top Picks: MYR 3.60
- One-Liner: RHB maintains a Neutral rating on Ta Ann, expecting a more balanced fundamental year in 2026 with volatile CPO prices and a breakeven timber segment, despite an attractive dividend yield.
Report at a Glance
RHB Investment Bank released its latest research report on TAANN on 2025-07-09, maintaining a “HOLD“ 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 fundamentally balanced year, lower year-on-year CPO prices and persistent geopolitical risks will likely lead to continued volatility. The timber segment is also anticipated to remain at a breakeven level, while the stock’s valuation is seen at the higher end of its peer range.
Investment Thesis (The Bull Case)
- Point 1: Ta Ann offers an attractive FY26F dividend yield of 8%, which is expected to provide support to the share price.
- Point 2: Global supply of the 17 oils and fats complex is projected to improve year-on-year in 2026F, driven by a partial recovery in palm, sunflower, and rapeseed supplies, alongside continued growth from soybeans, leading to a more balanced market.
- Point 3 / Key Beneficiaries: Demand from price-sensitive countries such as India, Pakistan, and Bangladesh is anticipated to return, boosting overall demand. Additionally, growth in Fresh Fruit Bunch (FFB) processing capacity from its new oil mill and potential increase in log export volumes are key drivers.
Potential Risks (The Bear Case)
- Risk 1: CPO prices are expected to be lower year-on-year and remain volatile due to ongoing geopolitical risks and their impact on crude oil prices.
- Risk 2: The timber segment is forecast to stay at a breakeven level in FY25F, indicating a lack of significant turnaround or contribution to earnings.
- Risk 3: Ta Ann is currently trading at 9.6x FY26F P/E, which is considered to be at the higher end of its peer valuation range (6-11x), potentially limiting upside. The company is also exposed to weather risks and adverse demand-supply dynamics in the timber industry.
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 | HOLD |
| Last Close Price | MYR 3.80 |
| Target Price (TP) | MYR 3.60 |
| Valuation Methodology | RHB applies a target P/E of 11x on Ta Ann’s Dec-2026F earnings, aligning with its small-cap peers. |
Analyst’s Conclusion
- Overall Stance: RHB maintains a Neutral (Hold) rating on Ta Ann, anticipating a balanced fundamental outlook for 2026 but with ongoing volatility in CPO prices and a timber segment that has yet to show a significant turnaround.
- Key Catalyst/Strength: The company’s attractive FY26F dividend yield of 8% is seen as a key supporting factor. Prospects of improved global supply-demand balance in oils and fats and returning demand from price-sensitive markets also provide positive drivers.
- Major Headwind/Risk: The primary headwinds include persistent CPO price volatility driven by geopolitical factors, the expectation of lower year-on-year CPO prices, and the timber segment remaining at a breakeven level. The stock’s current valuation at the higher end of its peer range also poses a risk to upside.
- What to Watch: Investors should closely monitor global geopolitical developments and their impact on CPO prices, the evolving supply and demand dynamics within the broader oils and fats complex, and any signs of a turnaround or improved performance from Ta Ann’s timber division.
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.
