First Resources

First Resources: Good set of result that was in-line. Rev at $US152.6m, +52% yoy and -7% qoq, while net profit at US$51m, +38% yoy and +4% qoq. Ebitda margins at 47% vs 57% yoy and 49% qoq. Earnings was underpinned by 1) +37% higher sales vol (increased mature hectarage, yield recovery of plasma and inventory drawdown), 2) 2% higher CPO prices and 3) higher refining contribution. Going forward, Citi expect vol growth to moderate in the remaining quarters, 2Q12 CPO production rose 5% QoQ (+17% YoY), bringing 1H12 volumes to 226k tons (+21% YoY; 44% of our FY12E of 516k tons), although expect growth to persist over the remaining qtrs on seasonality, albeit at a more moderate pace. On a per unit basis, don’t expect costs to further accelerate given a) ongoing weak rupiah environment, b) fertilizer purchases already locked in and c) volume increases would help spread the costs across a larger tonnage. Among other updates, grp’s tenth CPO mill was commissioned in 2Q12, bringing total milling capacity to 585 tons FFB per hour; an eleventh CPO mill is still under construction and is expected to be ready in 2H12, b) New plantings: planted 4,183 ha in 6M12; FR expects to add a total of 12k-15k ha by end of 2012. Ratings as follow: Citi maintains Neutral with $1.98 TP Maybank maintains Buy with $2.15 TP