First Resources

DBS Group Research, Nov 13

FIRST Resources (FR) reported Q3-2013 net profit of US$51.4 million, above our expected range of US$38-40 million. This brought 9M-2013 earnings to US$152.7 million, representing 76 per cent of our full-year forecast. The better-than-expected performance was due to a 22 per cent q-o-q jump in plantations revenue and 17 per cent q-o-q rise in refining and processing revenues.

Based on our unchanged forecast fresh fruit bunch (FFB) output of two million tonnes (+5 per cent y-o-y), we expect Q4-2013 FFB output to sequentially drop by 9 per cent.

Expect sequentially lower Q4-2013 earnings on lower volumes.

Rating cut to "hold"; recent outperformance has priced in the strong earnings recovery, target price unchanged at S$2.19.

HOLD