Wednesday, February 5, 2014

First Resources - Favorable risk-reward (JPM)

First Resources -
Price: S$2.00
Price Target: S$2.60
Favorable risk-reward, stay OW

The recent share price correction has provided potential re-entry point for First Resources as risk-reward improves. Downside risk to earnings is also among the lowest versus its peers. We reiterate OW.

■ Strong production recovery to drive outperformance:
We believe First Resources is likely to remain one of the outperformers among regional plantation peers this year. The company’s just-released Dec-2013 production numbers saw a strong pick-up in CPO production with 4Q13 up 19% Y/Y, ending FY13 with 12% Y/Y growth. With c.11,000ha (+9%) of estates expected to mature in 2014, and combined with recovery from tree stress, we expect 15-20% production growth this year for First Resources.



■ Better margin vs. peers to be sustained:
First Resources has been able to achieve higher-than-peers EBITDA margin from a combination of higher-than- peers ASPs and being the lowest-cost producer and we believe this is sustainable. We believe the 10-15% CPO price recovery in 4Q13 gave the company the opportunity to hedge some of its FY14 production at higher ASPs, just as earlier hedges in FY12 are starting to come off. First Resources is expected to remain the lowest cost producer regionally at US$260-280/MT helped by stronger production in FY14.


■ Downstream expansion provides new growth drivers for FY14:
First Resources has successfully completed the construction and commissioning of its new downstream expansion, taking capacity from 250,000 MT/year to 850,000 MT/year. FY14 will be the first year that we will see meaningful ramp-up in the new capacity and earnings contribution coming from it. We forecast 18% Y/Y growth in downstream earnings from the ramp-up of the new capacity on higher sales volumes.

■ Reiterate OW, raise Dec-14 PT to S$2.60:
We expect c.27% earnings recovery in FY14 on higher CPO price and production and new downstream capacities.We raise our group earnings estimates by 2% for FY14E/FY15E on higher downstream volume assumption and, so, raise our target price from S$2.50 to S$2.60. At 10x FY14E P/E, valuation looks undemanding vs the Singapore sector average of 12x.




Source/Extract/Excerpts/来源/转贴/摘录: JPM-Research,
Publish date: 21/01/14

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