MBSB Research has upgraded Ta Ann Holdings Bhd to BUY with a revised target price of RM6.72, citing renewed upside from firmer crude palm oil (CPO) prices, resilient plantation operations and attractive dividend yields.
The research house said the upgrade followed a meeting with Ta Ann’s management, with the stock expected to benefit from its historically strong share-price correlation with CPO movements.
Consistent cash returns also provide support to the investment case. Ta Ann paid dividends of 40 sen per share for FY2025, translating into a yield of more than 7% and a payout ratio of nearly 80%.
MBSB expects the plantation and timber group to continue offering dividend yields of 6.4% for FY2026 and 5.6% for FY2027.
Its revised RM6.72 target price is based on FY2027 forecast earnings per share of 56 sen and a price-to-earnings ratio of 12 times, compared with 11.5 times previously. The new multiple is close to Ta Ann’s five-year historical forward mean and the upper end of MBSB’s valuation range for pure upstream plantation companies.
Operationally, Ta Ann continues to guide for fresh fruit bunch (FFB) production of between 730,000 and 740,000 tonnes in FY2026, representing growth of about 6% to 8% from 686,000 tonnes in FY2025.
The forecast is slightly below its initial budget of 770,000 tonnes.
MBSB said management remained reasonably confident of meeting the latest target, supported by visible bunch formation as the company moves into a seasonally stronger production cycle, although weather conditions remain a key variable.
Production momentum is expected to remain healthy during the second half of FY2026, while fertiliser application has remained on schedule without meaningful disruption to availability or procurement.
The relatively young average age of Ta Ann’s oil palm trees, at about 12 years, should also support a healthy production profile, MBSB said.
Dry weather remains one of the key risks, although MBSB said Ta Ann appears relatively sheltered compared with plantations more heavily exposed to mineral soil. Around 70% of Ta Ann’s planted area is on peat land, with the remaining 30% on mineral soil.
Nevertheless, MBSB cautioned that a prolonged El Niño event could still affect future yields.
Cost pressures are also expected to moderate in the second half of FY2026 as higher output improves fixed-cost absorption.
Ta Ann’s CPO cost of production stood at around RM2,000 per tonne in 2QFY2026 after palm kernel credits, while management continues to target a full-year cost of approximately RM2,100 per tonne.
Following its latest assessment, MBSB raised Ta Ann’s earnings forecasts for FY2026 to FY2028.
The research house now projects earnings of RM264.3 million for FY2026, RM246.6 million for FY2027 and RM245.2 million for FY2028.
The revised forecasts incorporate CPO average selling price assumptions of RM4,300 per tonne in FY2026, RM4,350 in FY2027 and RM4,200 in FY2028, alongside an OER of around 20%, modest FFB production growth and slightly lower production costs.
MBSB said prudent fertiliser application and lower tender costs should help contain expenses, while firmer CPO prices and Ta Ann’s dividend profile underpin the upgraded BUY recommendation.
