First Resources

UOBKayhian onn 12 Mat 2015

FY15F PE (x): 14.9
FY16F PE (x): 11.7

First Resources (FR) reported a net profit of US$28.9m (-48.9% qoq, -33.9% yoy) for 1Q15. Its net profit accounts about 15% of consensus and our 2015 full-year forecast. 1Q is always the weakest quarter for plantation companies. Production on track to meet expectation. FR’s reported nucleus FFB production of 519,250 tonnes (+16.3% yoy, -12.6% qoq) yield recovery in its Riau estates and contribution from newly mature hectarage. This is on track to meet our full-year expectation of 9-11% yoy for 2015. We believe that production would continue to pick up in 2H15 as we are entering the high production season. Maintain BUY with a lower target price of S$2.40 based on 15x 2016F. We like FR because it is a beneficiary of Indonesia’s new export levy and biodiesel policies, and it also has a good track record of delivering better-than-industry FFB yield and OER.