First Resources

First Resources: Repost of article posted on 7 Jan: CLSA reiterated its Buy rating on First Resources with a TP of $2.55, citing that 2015 is the year for recovery in the company, supported strong fresh fruit bunch production on the back of yield recovery, as well as a structural recovery in CPO prices. In the near-term, declining inventory in Malaysia and the heavy rainfall and floods are expected to support CPO prices. With production expected to continue declining, exports are likely to rise in anticipation of the upcoming festivities. Additionally, increased El Nino risk is cited. If it happens, the subsequent production failure will drive CPO prices up. Given expected earnings growth of +28% 2-yr CAGR due to rising production and a structural recovery in CPO prices, First Resources is inexpensive at 9.1x FY16 P/E, and is near -1 std dev PB ratio.