Tuesday, December 3, 2013

UOBKH 2014 Top BUYs – Big Caps- First Resources

First Resources
Share Price S$2.24
Target Price S$2.60

BACKGROUND
First Resources (FR) is an Indonesia-based plantation company with a total planted area of 165,876ha in Indonesia and refining capacity of 250,000 tonnes p.a. It operates 12 palm oil mills in Indonesia and most of its plantation estates are strategically located in Riau and West Kalimantan. Eight Capital is the largest shareholder with a 63.2% stake.


OUTLOOK/RECOMMENDATION
• Balanced age profile propels growth. FR has a balanced age profile with about 58% being immature and young areas and a weighted average age of 8 years. This would ensure sustainable fresh fruit bunch (FFB) production and earnings growth in the next 5 years as its oil palm trees reach maturity and enter prime age. Although we expect to see weaker production growth of 3% in 2013 due to the biological cycle and dry weather, FFB production is expected to recover in 2014 at a double-digit rate given the balanced age profile.

• Flexible production strategy to ensure healthy margin. FR has the advantage of switching its downstream business between biodiesel production and palm olein and stearin production to ride on strong biodiesel or palm olein demand, depending on which offers higher margins. As the refining margin in Indonesia has shrunk significantly due to rising competition from new capacity, FR has switched to biodiesel production as it still offers healthy margins. This would help preserve good margins for its downstream business.

• Huge land reserves for future development. FR has about 162,000ha of unplanted landbank for future replanting. FR targets to plant 12,000-15,000ha of new area and increase its planted area to about 200,000ha from 138,587ha currently. Assuming a new planting rate of 15,000ha pa, it could continue to plant for another 10 years.

• Maintain BUY with target price of S$2.60, based on 15x 2014F PE at midcycle valuation. FR remains our favourite as its balanced age profile will support earnings growth and it has a hands-on management team. We estimate EPS at 11.3 US cents, 11.9 US cents and 12.9 US cents for 2013-15 respectively.




Source/Extract/Excerpts/来源/转贴/摘录: UOBKH-Research,
Publish date: 28/11/13

No comments:

Post a Comment

Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
  • Selected Indexes 52 week range

  • Margin of Safety

    Investment Clock

    World's First Interactive Investment Clock