Export Ban May Hurt Revenue in 2Q22

• First Resources (SGX:EB5)'s 1Q22 PATMI broadly met our / consensus expectations.
• First Resources’s 2Q22 results may be impacted by the recent export ban as we estimate 50-60% of its monthly sales volume is affected by the export ban; potentially only playing catch-up in 2H22. As for forward sales commitment, we understand it is now within normal percentage range done in the past.

A Decent Start Despite Export Restrictions

• First Resources provided an executive summary of key financial and operational information on its 1Q22 performance. Its 1Q22 headline PATMI of US$74m (+736% y-o-y, -3% q-o-q) met 32%/31% of our/consensus full year estimates.
• Stronger y-o-y earnings were boosted by higher revenue of US$304m (+54% y-o-y, -1%) and the absence of forward sales commitments with punitive tax implications suffered a year ago. Overall sales volumes were impacted by export quota imposed by the Indonesian government (for the month of Feb and first half of March) that led to a net inventory build-up of 31,000t in 1Q22 (1Q21: net drawdown of 4,000t).
• In 1Q22, fertiliser applied was behind schedule at < 25% of full-year’s requirements.

A Slow Start to 1Q22 Nucleus Output

• In terms of production, First Resources's 1Q22 FFB nucleus output of 645,383t (-8% y-o-y, -11% q-o-q) met just 21% of our full-year forecast (Fig.2).
• First Resources is keeping its 0-5% y-o-y FFB growth forecast for FY21E (MIBG: +3% y-o-y) as it is expecting a normalisation of industry output with 1H:2H ratio at 45:55 (2021: 50:50).

Procured 60-70% of Full-year Fertilizer Requirements

• The length of the export ban (the came into effect on 28 April) will have an impact on First Resources’s 2Q22 performance. First Resources still has storage capacity to last more PER at -1 standard deviation of its 5-year mean.

Source: Maybank Research - 16 May 2022