First Resources

UOBKayhian on 18 June 2014

FY14F PE (x): 14.3
FY15F PE (x): 13.0
May production was affected by fewer harvesting days. First Resources (FR) harvested
a total FFB of 165,821 tonnes in May 14, which was 3.1% lower mom but 4.5% higher
yoy. The mom decline was due to four less harvesting days in May 14. For 5M14, total
FFB production was up by 10.1% yoy with nucleus FFB production increasing by 9.7%
yoy. Although 5M14 production growth was higher than our expectation of 6.7% for fullyear
2014, we are maintaining the growth assumption as 2H14 will affected by the
higher base in 2H13. Our expectation is at the lower end of management guidance of 5-
10% as we factored in the possibility that FFB yield for its Sumatra estates is likely to be
affected by the drier-than-usual weather in 2Q13 and 1Q14.
No change to earnings forecast. Given its strong 2013 performance, which was wellsupported
by the high-priced forward sales, FR’s 2014 core net profit will only be
marginally better at US$219m (2013: US$217m).
Maintain BUY and target price of S$2.80, based on 15x 2015F PE. FR remains one of
our top picks in the plantation sector for its attractive profile age, cost-efficient estates
and hands-on management.