TSH Resources Berhad: Analyzing a 12% Net Profit Growth

Business Description

TSH Resources Berhad is a Malaysian-based company involved primarily in the palm products sector with additional operations in other segments. The company’s geographic footprint includes Malaysia and Indonesia, with a focus on palm oil production and related products.

Industry Position and Market Share

TSH Resources Berhad is a significant player in the palm oil industry, competing with other major regional producers. While the report does not specify market share details, the company faces competition from other palm oil producers in Southeast Asia.

Revenue Streams and Customer Base

The company generates revenue primarily from palm products, accounting for the majority of its income. Revenue from other segments, such as timber, is much smaller. The customer base is likely diverse, including both domestic and international buyers, particularly from major palm oil import countries.

Financial Statement Analysis

Income Statement

For the year-to-date ended 30 September 2024, TSH Resources Berhad reported a 12% increase in core profit before taxation, reaching RM140.1 million compared to RM125.4 million during the same period in 2023 [[14]]. Despite a 10% decline in revenue, the company managed to improve profitability, indicating effective cost management and contributions from joint ventures and associates.

Balance Sheet

As of 30 September 2024, TSH Resources Berhad’s total assets stood at RM2,673.8 million, with significant investments in property, plant, and equipment. The company’s equity attributable to owners was RM1,960.3 million, slightly decreased from RM2,046.9 million at the end of 2023 [[4]].

Cash Flow Statement

Net cash flows from operating activities were RM144.9 million, indicating strong cash generation capacity. However, the company used RM62.2 million in investing activities, primarily for capital expenditures, and RM98.1 million in financing activities, including debt repayments and dividends [[6]].

Dividend Information

The company declared an interim dividend of 2.5 sen per share for the financial year ending 31 December 2024, to be paid on 20 December 2024 [[21]].

Key Findings and Recommendations

Strengths

• Increase in core profit before taxation by 12% despite revenue decline, showing strong cost management and strategic contributions from joint ventures.
• Declared interim dividend maintains investor returns.
• Significant breakthrough in resolving operational disruptions in Indonesian plantations, which could stabilize future productivity [[16]].

Risks

• Decline in revenue by 10% year-to-date and ongoing challenges with palm product sales [[14]].
• Exposure to foreign exchange fluctuations and export levies impacting profitability [[16]].

Recommendations

For Current Stockholders

Consider holding the stock as the company demonstrates an ability to manage costs effectively and has resolved significant operational disputes. The declared dividend also provides a steady income stream.

For Potential Investors

Potential investors might consider buying shares, given the company’s ability to increase net profit amidst revenue challenges and the recent resolution of operational issues. However, be mindful of potential market volatility and foreign exchange risks.

Special Activities

The company is undertaking new planting to expand its plantation area and has appointed key personnel to drive productivity and efficiency enhancements [[17]].

Report Date

The financial report was announced on 21 November 2024, covering the financial period up to 30 September 2024 [[2]].

Disclaimer

The above recommendations are based on the financial report provided and should be considered alongside other market factors and personal financial goals. Investors are encouraged to conduct further research or consult with a financial advisor.

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