Osk Research had a research article on TSH Resources.
Now I am one who always like to refer back to what was written previously.
TSH reported 2005 Q2 earnings on 25th Aug 2005.
Quarterly rpt on consolidated results for the financial period ended 30/6/2005
On the next day, OSK had a research article on TSH.
TSH's annualised 1HFY05 revenue is within our expectation as all of its divisions recorded an improved sale figures. However, its net earning was 36.8% below market and our estimates. The disappointing earning was mainly due to its 65% owned Ekowood which recorded a thinner margin, as the increase in raw material costs and weakened EURO cannot be transferred to the customer immediately (90% of Ekowood's sale is exported and denominated in EURO). Besides, TSH's oil palm also posted a lower profit due to seasonal factor as FFBs production was generally lower during the 1H. This is further compounded with the lower CPO price and increase fertiliser costs.
Ahh... ze below estimate thingy yet again.
Osk notes that TSH performance was 36.8% below market and our estimates!
OSK was estimating a net profit of 61 million for TSH's fy 2005.
TSH only did 19.290 million for the first half of its fy 2005 and based on an annualised basis, TSH should be earning around 38 million or so for its fy 2005.
38 million is very far from the 61 million hor.
So what does OSK do?
We have decided to revise downward TSH's earning forecast by 8.7% and 6.8% for FY05 and FY06 respectively as we think Ekowood need time to gradually pass on the costs increase to customers. Weakened in CPO prices lately compounded with increase in fertiliser costs will also further impact TSH's bottom line. However, we like TSH for its promising Bio-Integration projects and maintain our Buy call with a 12-month target price of RM2.19 based on Sum of Parts method, implied a PER of 11.2x against FY06 FD EPS.
Hmmm.. they revised TSH's earnings from 61 million to 55.7 million... but... butt... buttt.... their fy 2006 earnings is estimated at 68.7 million.
So for a stock that failed to meet their estimations, OSK still managed to maintain a BUY call on it.
Price of TSH then was 1.74. OSK target price was 2.19.
TSH reported its next earnings on 25th Nov 2005.
Quarterly rpt on consolidated results for the financial period ended 30/9/2005
Net profit was 8.963 million.
Total ytd net profit fy 2005 was 28.253 million.
Hmmm... looks like it's way below OSK's estimates... and ... err... aiseh i cannot locate in OSK's website their comments on TSH earnings.... hmmmm..... mmm..... maybe me browser is koyak lah.. cannot pakai lor.
Anyhow in today's research notes... it was noted that TSH has a share sale agreement with Wilmar Edible Oils:
TSH Resources (TSH) has on 9 January 2006 entered into a Share Sale Agreement with Wilmar Edible Oils SB (Wilmar) to dispose 2.5m shares in TSH-Wilmar SB and 1 ordinary share in Bio Fuel Asia SB, representing 50% equity interest in each company. The move is to form a strategic alliance with Wilmar to undertake a palm oil refinery and kernel crushing together with an operation of cogeneration plant and electricity & steam for bio-fuel.
Now what is interesting to me is the following...
BUY. We reiterate our BUY recommendation with a 12-month target at RM1.78 based on sum of parts methodology. Coupled with a decent gross dividend yield of 3.6% for FY06, the stock may potentially deliver a 12-month total return of 25%.
Now... what is interesting is that in the earnings table, there is no longer an OSK estimates but instead it only states consensus estimates. (LOL!!!.. i wonder why! typo mistake? :P)
Anywayyyy.... ze consensus estimates:
fy 2005 earnings is at 45 million..
fy 2006 earnings is at 58.9 million.
Sooooo....... price of TSH is now at 1.47. And OSK is calling a buy based on sum-of-parts (meh leh ka?) on TSH with a target price of 1.78.
How?
I am sure if a OSK subscriber that follows the buy recommendation won't be too happy.
Just in Aug 2005, TSH was @ 1.74 with a buy and a target price of 2.19.
Now in Jan 2006, TSH is @ 1.47 with a buy and a target price of 1.78.
Die standing isn't it?
ps.
The dilution of TSH earnings caused by the conversion of warrants is a pretty interesting case study.
Wednesday, January 11, 2006
TSH Resources
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Oh.. i found this AFX news clip dated Dec 28th 2005.Take note of the 2nd last paragraph...
TSH RESOURCES 'BUY' KEPT ON PROMISING OUTLOOK - OSK
KUALA LUMPUR (XFN-ASIA) - OSK Research has maintained its "buy" call on palm oil milling specialist TSH Resources Bhd, with a fair value of 1.78 rgt a share, citing the company's promising outlook.
In a note to clients, OSK said that underpinned by gross dividend yield of 4 pct, the stock may potentially deliver a total return of 36.8 pct over 12 months.
TSH specialises in palm oil milling. It also manufactures solid hardwood flooring and is also expanding its bio-integration business.
The company posted a record net profit of 56.8 mln rgt in 2004 or a three-year compound annual growth rate (CAGR) of 46.7 pct, OSK noted.
It said that TSH's balance sheet remains healthy with net gearing of 0.17 times and current ratio of 2.4 times as of the third quarter of 2005.
"Hence, its aggressive expansionary plan would not strain its financials, " OSK said.
It said TSH's bio-integration project looks promising, including turning oil palm wastes into electricity, gas and eco-friendly paper.
TSH has secured a biomass renewable energy purchase agreement with Sabah Electricity Supply Sdn Bhd and expects net profit of 7 mln rgt by 2006 onwards, OSK noted.
"More interestingly, TSH is the world's first in turning oil palm empty fruit bunches into 80 gram writing paper. This venture would potentially contribute 105 mln rgt in revenue and 30 mln rgt in net profit upon optimum utilization of its 30k tonnes capacity based on current market price for paper of 784.29 pound sterling/tonne," OSK said.
The paper plant would take another 18-24 months to set up; hence earnings would not come in until second half of 2007, it noted.
OSK is forecasting TSH to post a net profit of 41.7 mln rgt or earnings per share (EPS) of 11.4 sen this year and a profit of 56.1 mln rgt or EPS of 15.4 sen for 2006.
At the noon break, TSH was flat at 1.34 rgt.
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