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Equity Bottom-Up

No-moat First Resources reported solid fourth-quarter results, with revenue and EBITDA up by 33.9% and 85.1% year over year, respectively, mainly driven by higher average selling prices for crude palm oil, or CPO. As a result, the company’s full-year net profit for 2016 soared by 31.1% year over year to USD 125 million, despite a 5.1% year-over-year decline in the production volume of fresh fruit bunches, owing to the negative effect of El Nino. Excluding the USD 13.2 million fair value gains of biological assets, the firm’s net profit was in line with our expectation. We keep our earnings forecasts largely unchanged.We raise our fair value estimate to SGD 2.02 per share from SGD 1.80 after rolling forward our valuation model. At the current stock price, we think the company is slightly undervalued.Analyst: Chokwai Lee

No-moat First Resources reported solid fourth-quarter results, with revenue and EBITDA up by 33.9% and 85.1% year over year, respectively, mainly driven by higher average selling prices for crude palm oil, or CPO. As a result, the company’s full-year net profit for 2016 soared by 31.1% year over year to USD 125 million, despite a 5.1% year-over-year decline in the production volume of fresh fruit bunches, owing to the negative effect of El Nino. Excluding the USD 13.2 million fair value gains of biological assets, the firm’s net profit was in line with our expectation. We keep our earnings forecasts largely unchanged.We raise our fair value estimate to SGD 2.02 per share from SGD 1.80 after rolling forward our valuation model. At the current stock price, we think the company is slightly undervalued.Analyst: Chokwai Lee

First Resources' 4Q Results Underpinned by Strong Upstream Earnings; Increasing FVE to SGD 2.02