Affin Daily Insight (LV) - 12 June 2014 - TIMBER / SPSB / ECONOMY -IPI

Top Calls

Sector Update � Timber (NEUTRAL, maintain) - Plantation to drive earnings We believe that log supply is likely to remain tight going forward due to diminishing natural forest resources along with Myanmar�s recent ban on log exports, which started on 1 April 2014. This, we believe should keep average selling prices of timber products firm or moderately higher going forward. Over the years, Jaya Tiasa, Ta Ann and WTK, have been aggressively expanding their palm oil plantation. Their FFB production will continue to increase on the back of expanding matured estates and their attractive young palm tree age. The weighted average palm tree age profile for the 3 companies are approximately 4-7 years old. We maintain our NEUTRAL recommendation on the timber sector as we only foresee a moderate pick-up in both demand and average selling prices of timber products. However, we like the structural transformation via the diversification into palm oil business, a future growth driver. Our preferences for sector exposure are Ta Ann and WTK.

Other Calls

Results Note � SP Setia (REDUCE, maintain) - A modest set of results, within expectations

Economy � IPI - Manufacturing output holds steady in April, E&E related

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