PublicInvest ceases coverage on TSH Resource due to slow growth, sluggish FFB yield

KUALA LUMPUR: Public Investment Bank (PublicInvest) is ceasing its coverage of TSH Resources Bhd due to the company's limited growth prospects and sluggish fresh-fruit bunches (FFB) yield.

The firm said it is reallocating its internal sources to other sectors.

"Investors should no longer depend on any of our financial forecasts for TSH Resources in making investment decisions, nor infer any adverse opinion as a result of our decision to cease research coverage," said PublicInvest.

In a research note today, PublicInvest said FFB production growth is anticipated to be subdued this year due to the sale of plantation assets in Indonesia and Sabah (13,214 hectares) over the past two years.

"Additionally, the average age of the plantations is increasing (currently 13.4 years old), and FFB yield remains low due to insufficient replanting activities in recent years," PublicInvest said.

Additionally, TSH Resources encountered significant crude palm oil (CPO) taxes when exporting its CPO products due to the current unfavourable CPO export tax policy in Indonesia.

"During the first quarter (1Q), it incurred a lower Indonesian export levy of RM20.3 million compared to the first quarter of financial year 2023 (1QFY23) of RM26 million," it noted.

The company has assigned a 'Neutral' rating to TSH Resources with a target price of RM1.02 for its final call.

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