First Resources - Maybank Research 2022-02-27: Sharply Better 2H21 Results

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FIRST RESOURCES LIMITED (SGX:EB5)

First Resources - Sharply Better 2H21 Results

Limited upside; HOLD for S$0.051 final dividend

• First Resources (SGX:EB5)'s FY21 core PATMI beat ours but was within street estimates. Better 2H21 results were lifted by higher CPO ASP and improved downstream margins.
• We expect First Resources to deliver +37% y-o-y growth in FY22E core PATMI mainly on higher CPO ASP. First Resources has significantly lower forward sales in FY22E vs FY21.

2H21: Results picked up sharply h-o-h

• First Resources's 2H21 core PATMI of US$119m (+117% y-o-y, +393% h-o-h) brings FY21 core PATMI to US$149m (+54% y-o-y) which met 107%/104% of our/street full-year estimates.
• First Resources's 2H21 revenue rose 62% y-o-y to US$619m mainly driven by higher CPO/ PK ASPs of US$688/t (+29% y-o-y) / US$565/t (+68% y-o-y) and a net drawdown of inventory of 50,000 tonnes (2H20: build-up of ~25,000 tonnes), which more than offset lower FFB nucleus output (-6% y-o-y).
• The 2H21 plantation EBITDA grew 28% y-o-y to US$168m. As for downstream, its EBITDA grew 103% y-o-y to US$44m on higher margins of US$69/t (+94% y-o-y) which benefited from inventory gains and Indonesia’s differential export tax rates between processed palm oil and CPO.

FY22E: 0-5% FFB growth guidance

• FY21’s unit cost of production was US$250/t (+13% y-o-y), due to higher fertilizer cost even though it has only completed 80% of its plan. With fertilizer and higher wage pressures in FY22E, First Resources is guiding for its unit cost to go up to US$270-290/t (+8%-16% y-o-y; MIBG Research: +10% y-o-y).
• As for FFB output, First Resources is guiding for 0-5% y-o-y growth for FY22E (FY21: +1% y-o-y). Without providing any details, First Resources guides that it has made some forward sales in FY22E but significantly lower in volume than FY21.

Raising FY22E/23E core PATMI by 35%/6%

• Following our industry-wide CPO ASP revisions to MYR4,100/t (from MYR3,200/t) for 2022E and MYR3,200/t (from MYR3,000/t) for 2023E, we raise our FY22E/23E core PATMI forecasts for First Resources by 35%/6% respectively. We also introduce our FY24E EPS forecast.
• See
  • First Resources's Share Price,
  • First Resources's Target Price,
  • First Resources's Analyst Reports,
  • First Resources's Dividend History,
  • First Resources's Announcements,
  • First Resources's Latest News.
• First Resources declared a final limited upside, First Resources remains a HOLD. We prefer Bumitama Agri (SGX:P8Z).

Ong Chee Ting Maybank Research | https://www.maybank-ke.com.sg/ 2022-02-27

SGX Stock Analyst Report HOLD MAINTAIN HOLD 1.88 UP 1.680