First Resources

First Resources: UOB Kay Hian maintains Buy with $2.60 TP. House note that no hotspots have been spotted on FR’s Riau estates so far. The haze problem might affect the productivity of harvesters and slow down transportation of FFB or CPO. The downstream business is getting competitive as new capacities are coming on-stream slowly, but this has been partly offset by biodiesel demand from EU as the anti-dumping issue has been concluded with FR being charged with 0%. FFB peak production to come after Raya festive season. FFB production is likely to peak in Sep 13 after the fasting month in July and the Raya festive season in August. Based on historical trends, production tends to slow down during the Raya festive season as workers will be away, and then peak in the following month as harvesting activities resume. Overall, house maintains BUY with target price of $2.60, based on 15x 2014F P/E. House have raise valuation from 14x to 15x PE given the improving CPO price uptrend momentum. Like FR for its hands-on management team, young age profile and efficiency.