First Resources: (S$1.665) Weak 2Q16 largely priced in
- 2Q16 missed estimates, with 1H16 earnings of US$31.5m (-36.2%) making up just 29% (1H15: 46%) of FY16 street estimates.
- For the quarter, while revenue rose 14% to US$135.4m due to better sales from refinery and processing (+51%), this was partly offset by reduced production volume and yield from adverse effects of El Nino.
- FFB harvested fell 15.6% as FFB yields fell to 3.4 tonnes/ha (2Q15: 4.4 tonnes/ha), which resulted in a 20.3% drop in CPO production to 126,550 tonnes.
- Management cut its interim DPS to 0.625¢ (1H15: 1.25¢).
- Consequently, Maybank KE has revised down its FY16-18 earnings by 6-23%. Maintains Buy with TP of $1.80.
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