Thursday, 17 March 2011 11:17
KUALA LUMPUR: Timber-related stocks advanced on Thursday, March 17 on expectations of an increase in demand for products following the earthquake in Japan last Friday.
AmResearch has maintained its overweight rating on the timber sector and its buy call on Ta Ann and Jaya Tiasa, with fair values of RM6.30 and RM6 respectively.
The research house said that the Ta Ann management informed it that there had been no supply disruption so far to Japan.
“Orders are placed once or twice in a month. Its shipments go through Osaka, south of Tokyo in the central-southern region, which was not affected by the tsunami,” it said.
Meanwhile, MIDF Research in a note March 17 said local timber companies will be the main beneficiary when Japans starts to rebuild the earthquake disaster areas as Malaysia is their largest plywood exporter accounting for 48% of Japan’s total plywood.
Japan imports more than 50% of the total plywood for its consumption, it said.
“We believe the main beneficiary will be WTK and Ta Ann since these companies exposure to the Japan market is about 80-90% of their plywood sales.
“Between them, WTK has greater leverage since it is a pure timber company compared to Ta Ann whose earnings mainly comes from CPO with its plywood division registering loss due to the usage of more costly eco-friendly raw material sourced from its Tasmanian operation.
Lingui is the other beneficiary as it has close to 50% exposure to Japan’s plywood sales, it said
*source the edge
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