CLSA has a note out on First Resources in which it reiterates its outperform rating on the planter and raises its target price from $2 to $2.10. as the house expects the company’s earnings through to 2017 to grow significantly with First Resources’s cost base on a steady downtrend since 2014 on improved productivity and weakening rupiah.
Another reason for this bullishness was the company’s FY15 Fresh Fruit Bunch production which grew 14% year on year, ahead of the house’s estimates as young estates helped to propel growth in harvests.
Although El Nino is said to crimp supply across the industry, First Resources is expected to be least affected given its concentration in the Riau islands which has seen significantly better rainfall than other regions.
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