First Resources

First Resources released its operating statistics for May ’15:
- CPO production: 52,224 tonnes (+22.8% y/y)
- CPO extraction rate: 22.6% (+0.5ppt)
- Palm kernel (PK) production: 12,506 tonnes (+25.7%)
- PK extraction rate: 5.4% (-0.2 ppt)

For 5M15, CPO production was 249,623 tons (+14.5%), while that for palm kernel was 58,031 tons (+13.1%).

This comes amid the slew of news in the past month for the plantation sector, which may be positive to CPO prices.

This includes:
1) El Nino, where the region has a high probability of below-average rainfall in 2H15 and potentially below-average CPO production.

2) Widening CPO - Soybean oil discount due to the rising soybean price from lower crop production, which will provide a support on substitute price competitiveness.

3) US’ ban of trans fat by 2018, where palm oil is expected to be the substitute product and lead to a gradual increase in demand.

First Resources is the most well-covered among other SGX-listed palm oil plays. The street is generally bullish on the firm's prospects, backed by proven management capabilities and relative profitability to peers, supported by the plantation's balanced age profile.

Bloomberg consensus has 14 Buys, 2 Holds and 0 Sells on the counter, with a 12-month TP of $2.30.