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First Resources - Maybank Kim Eng 2020-05-24: A Slow Start To FY20

FIRST RESOURCES LIMITED (SGX:EB5) | SGinvestors.io FIRST RESOURCES LIMITED (SGX:EB5)

First Resources - A Slow Start To FY20


First Resources adopts half-yearly financial reporting

  • Based on limited available info, First Resources (SGX:EB5)’s 1Q20 headline PATMI appears to come in below our/consensus estimates on low output and lower sales. We anticipate a much stronger pick up in 2H earnings on seasonally higher output, lower fertiliser costs and better downstream margins.
  • First Resources remains a BUY with unchanged Target Price of SGD1.85 on 18x 2020 PER peg, its 5- yr mean. At ~12x 2020 PER now, First Resources trades below -2SD of its 5-yr mean.



1Q headline PATMI missed estimates

  • First Resources has discontinued its quarterly reporting (as permitted by SGX). Instead, it provided an executive summary of key financial and operational information on 1Q20 performance.
  • It reported a 1Q20 headline PATMI of USD22m (+81% y-o-y, -31% q-o-q) which met just 19%/17% of our/market FY20 estimates. However, its EBITDA of USD54m (+38% y-o-y, -28% q-o-q) met 24% of our FY20 estimate.
  • The y-o-y earnings growth was achieved on higher ASP which offset lower FFB output (0.63mt; -4% y-o-y, - 22% q-o-q). Overall lower sales volume was also impacted by lower purchases from third parties and a net inventory build-up of 8,000t in 1Q20 (compared to a drawdown of 17,000t in 1Q19).
  • As for fertiliser, First Resources is on track with its programme as it has completed around one-third of its full-year fertiliser requirements in 1Q20. As for downstream, we understand it remains profitable in 1Q20 but without further details.


Keeping its FFB growth guidance of 0-5% for FY20



Make no changes to our earnings forecasts

  • We are keeping our EPS forecasts in the absence of available info to do a detailed analysis. We will await First Resources’s half-yearly reporting, especially on its achieved FFB output, to re-assess our earnings forecasts.





Ong Chee Ting CA Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2020-05-24
SGX Stock Analyst Report BUY MAINTAIN BUY 1.850 SAME 1.850



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