First Resources

UOBKayhian on 17 Mar 2014

FY14F PE (x): 12.6

First Resources’ Feb 14 production was up yoy on yield recovery from last year’s stress
especially from the plasma areas. The recovery is unlikely to be sustained in the coming
months, as its FFB yield could have been affected by the dry weather in 1H13 and since
end-Jan 14 in Sumatra. We have taken into consideration the dry weather impact in our
production forecast with only 6.7% yoy growth for 2014 vs management guidance of 5-
10%.

Maintain BUY with 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. PE valuation expanded as FR continues to deliver a good
set of results under the prudent management team. As the PE chart showed, FR’s 1-
year forward PE has been trading up over the last five years, reflecting its good earnings
and productivity track record.