Top Story : Timber – Prospects are looking better Neutral Sector Update
- Japan housing starts may recover from Feb 09 onwards (the first yoy growth in 15 months), given the low base in Feb 09. We may also see a yoy recovery in yearly housing starts in 2010, albeit a weak and gradual one.
- Selling prices for plywood are firming up. While official figures have yet to confirm this trend, we understand from industry players that average selling prices for plywood products have been inching up by 3-5% qoq in 1Q10 from 4Q09, the strongest increase being for floor base products. We believe that the increase in average selling prices was driven mainly by shortages in supply, which led to some panic buying from Japan trading houses. However, the risk is if the supply return to the market and if demand is not enough to offset supply, the downward price pressure could come back again.
- We increased Jaya Tiasa’s FY11-12 earnings forecasts by 30-57% after increasing our plantation FFB yield assumptions by 20-44%.
- Maintaining our sector call of Neutral. Our top picks are Ta Ann (OP; FV = RM5.95) and Evergreen (OP; FV = RM2.35).
RHB Equity 360° : 17 March 2010 (Timber, Top Glove; Technical: CIMB) -17/03/2010
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