First Resources

First Resources: DBSV maintain Hold, but reduces TP to $1.55 from $1.77. Note that grp attended House “Pulse of Asia” Conference last week, during which the group provided updates on growth prospects, costs, capex plans and strategies going forward. Based on capex plans given, houses included RBD olein, PFAD, RBD stearin, PKO and PK meal in forecasts, alongside higher capex outlay for the construction of 2 additional CPO mills and a PK crusher….

Given these changes, FY10F-12F earnings were revised by -1%-+9%, with imputed additional shares from full conversion of US$100m CB resulting in fully diluted TP of $1.55/share (post CB conversion share capital: 1,584.5m)….

Given a coupon rate of 5.625%, estimate that conversion of CB should be triggered when FR’s share price reaches $1.53 (fully diluted basis, discounted using 3% risk-free rate). Strong 3-year earnings CAGR expected….

Expect grp to achieve a strong 22.5% earnings CAGR between FY10 and FY13 - mainly boosted by incremental mature hectareage and increasing yields from its relatively young age profile. However, believe the counter may underperform its peers in the near-term given the looming 116.1m shares overhang from the CB conversion.