JTiasa enjoyed another good quarterly result

Background

Jaya Tiasa Holdings Bhd ('JTiasa') is involved in the extraction of timber logs, downstream processing of timber products and the cultivation of oil palm. Its timber concession area, which measured 1.76 million acres, is located in Sarawak. Its timber processing division has annual capacity to produce 360,000 cu metre of plywood; 324,0000 cu metre of rotary veneer; 108,000 cu metre of sawntimber; 12,000 cu metre of blockboard; 6,000 cu metre of film overlay; and 6,000,000 square metre of sliced veneer. Its oil palm division has a total area of 83,480 hectares, of which only 12,000 hectares are planted & only a small portion of it is matured.

Recent Financial results

JTiasa has just reported its results for QE31/1/2007 last week. For that quarter, its net profit jumped by 14.6% q-o-q or 221% y-o-y to RM38.7 million while its turnover increased by 9.9% q-o-q or 14.3% y-o-y to RM227 million. The sharply higher net profit is attributable to higher selling prices for its timber products & logs.

When comparing the last 4 quarters' results with the preceding 4 quarters, we can see that JTiasa's net profit has jumped two folds from RM34.1 million to RM103.7 million on the back of a 27.7%-increase in turnover form RM653 million to RM835 million.



Valuation

If JTiasa's last 2 quarters' performance can sustain, it may report a full-year EPS of 56 sen. Base on this & its closing price as at March 26 of RM4.52, JTiasa is now trading at a PE of 8.1 times. At this multiple, JTiasa is deemed attractive with an upside target of RM5.60.

Technical Outlook

JTiasa's share price appears to move in an upward channel. The lower channel support is at RM3.80 while the upper channel resistance is at RM4.90. The share may drift back & find support at the middle channel at RM4.30. I believe that this would be a good entry level for JTiasa.


Chart: JTiasa's daily chart as at March 26

Conclusion

Based on attractive valuation & the share price's current uptrend move, JTiasa would be a good stock to invest in for the medium-term.