• First Resources’ 2Q18 earnings ahead of our expectations.
• Strong output buffered earnings.
• Entering prime age cycle – earnings growth catalyst.
• Maintain BUY with Target Price of S$2.00.

Earnings Ahead of Our Expectations, Strong Output Buffered 2Q18 Performance

First Resources (FR) booked 2Q18 earnings of US$35.9m (+55% y-o-y, +30% q-o-q) – slightly ahead of our expectations. 

The strong growth was led by 29%/39% growth in CPO and PK sales volumes respectively, partially impacted by a net inventory build-up of ~21,000 tonnes in 6M2018 (6M2017: drawdown of ~47,000 tonnes). We expect this to be recognised subsequently in 3Q18. 

Source: DBS Research - 15 Aug 2018