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First Resources (FR SP) 1Q25 Results: Buy Rating, Target Price, and Analysis 1

Posted on May 16, 2025 at 10:54 am (GMT+8)

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Maybank Research Pte Ltd

May 16, 2025

First Resources (FR SP): 1Q25 Results Beat Expectations; Tactical Upgrade to BUY

Executive Summary

  • First Resources’ (FR) 1Q25 headline PATMI exceeded both internal and market expectations. [[1]]
  • Despite anticipating a seasonally weaker 2Q25 due to lower output, earnings are expected to rebound in 2H25. [[1]]
  • Recent price declines are viewed as incorporating market negatives, presenting a favorable entry point. [[1]]
  • EPS forecasts have been adjusted to account for higher export levies and the acquisition of Austindo (ANJ) assets. [[1]]
  • A tactical upgrade from HOLD to BUY is recommended, driven by an attractive net dividend yield exceeding 5% and a potential 12% total return to a revised TP of SGD1.57. [[1]]
  • Optimizing costs and divesting loss-making ANJ businesses could lead to further EPS forecast upside. [[1]]

1Q25 Performance: Driven by ASPs and Output

  • 1Q25 headline PATMI reached USD63m, marking a 75% YoY increase and surpassing estimates. [[1]]
  • Strong performance attributed to higher average selling prices and increased sales volume, supported by improved FFB nucleus output (+12% YoY, -18% QoQ). [[1]]
  • Inventory saw a net build-up of 18,000t in 1Q25. [[1]]
  • Fertilizer application is on track, with approximately 25% of the annual plan completed in 1Q (1Q24: ~20%). [[1]]

Downstream Margins Show Promise

  • Downstream division margins were positive, bolstered by biodiesel plants benefiting from elevated glycerin prices. [[1]]
  • Biodiesel capacity has nearly tripled since January 2025, from 250,000 tpa to 700,000 tpa. [[1]]
  • Increased biodiesel volume to meet the government’s B40 mandate. [[1]]

ANJ Acquisition and Export Levy Adjustments

  • FY25E FFB nucleus output growth forecast revised to 20% YoY, incorporating ANJ’s contribution effective May 6. [[1]]
  • FR acquired 91.2% of ANJ for USD330m cash and has offered to buy out the remaining minority stake at the same price, potentially requiring a total cash outlay of USD362m. [[1]]
  • ANJ’s purchase is expected to be EPS neutral for FY25E. [[1]]
  • Increased export levies for CPO by the Indonesian government (10% from 7.5% effective May 17) factored into forecasts, lowering net CPO ASP in the domestic market. [[1]]
  • Overall, FY25E-27E EPS trimmed by -3%/-4%/-3%. [[1]]

Revised Target Price and Recommendation

  • Upgrade to BUY (from HOLD). [[1]]
  • 12-month Price Target: SGD 1.57 (+12%). [[2]]
  • Previous Price Target: SGD 1.69. [[2]]

Company Overview

  • First Resources Ltd. cultivates oil palms in Indonesia and operates palm oil refinery and biodiesel processing facilities. [[2]]
  • Market capitalization: USD1.8B. [[2]]
  • Issued shares: 1,584m. [[2]]
  • Free float: 26.3%. [[2]]
  • Major shareholders: TMF Group BV (64.7%), King Fortune Trust (5.6%), Fidelity/ FMR / Abigail (4.2%). [[2]]

Financial Statistics and Forecasts

FYE Dec (USD m) FY23A FY24A FY25E FY26E FY27E
Revenue 981 1,039 1,206 1,284 1,298
EBITDA 281 399 430 446 453
Core net profit 146 228 208 211 218
Core EPS (cts) 9.3 14.7 13.4 13.6 14.0
Core EPS growth (%) (55.9) 57.5 (8.9) 1.4 3.3
Net DPS (cts) 4.8 7.2 6.7 6.8 7.0
Core P/E (x) 11.6 7.4 8.5 8.4 8.1
P/BV (x) 1.3 1.2 1.2 1.1 1.0
Net dividend yield (%) 4.4 6.6 5.9 6.0 6.2
ROAE (%) 11.1 18.3 14.5 13.7 13.2
ROAA (%) 8.1 12.2 9.1 7.9 7.8
EV/EBITDA (x) 6.6 4.8 5.7 5.2 4.8
Net gearing (%) (incl perps) 5.3 7.6 35.9 24.6 13.9
Consensus net profit – – 239 221 227
MIBG vs. Consensus (%) – – (13.1) (4.6) (4.1)

1Q25 Results Review

FYE Dec 1Q25 1Q24 % YoY
(USD m) (USD m)
Revenue 280 211 33
EBITDA 107 69 54
Headline PATMI 63 36 75
+/- ppts
EBITDA margin (%) 38 33 5

Operational Data

Operational
Production
FFB nucleus (t) 751,084 668,582 12
CPO (t) 231,861 201,754 15

Earnings Revision Analysis

FYE Dec FY25E FY26E FY27E FY25E FY26E FY27E
Old Revised /New
SGD ‘m SGD ‘m SGD ‘m SGD ‘m SGD ‘m SGD ‘m
Revenue 1,061.9 1,077.4 1,085.0 1,206.5 1,283.8 1,297.7
EBIT 306.5 312.3 312.9 315.2 328.2 332.8
PATMI 215.1 219.6 223.4 207.8 210.8 217.6
Core PATMI 215.1 219.6 223.4 207.8 210.8 217.6
% change -3.4% -4.0% -2.6%

Key Assumptions

Assumptions:
CPO ASP (MYR/t) 4,000 4,000 4,100 4,000 4,000 4,100
% change – – –
FFB nucleus output (‘m tonnes) 3.364 3.431 3.500 3.924 4.288 4.374
% change +16.6% +25.0% +25.0%

Risk Factors

  • Weather anomalies affecting output growth. [[3]]
  • Lower-than-expected CPO prices. [[3]]
  • Negative policies from import countries. [[3]]
  • Unfavorable Indonesian government policies. [[3]]
  • Lower crude oil prices impacting biodiesel demand. [[3]]
  • Weaker competing oil prices. [[3]]
  • Potential RSPO membership suspension. [[3]]

Financial Summary

FYE 31 Dec FY23A FY24A FY25E FY26E FY27E
Key Metrics
P/E (reported) (x) 11.9 6.8 8.5 8.4 8.1
Core P/E (x) 11.6 7.4 8.5 8.4 8.1
P/BV (x) 1.3 1.2 1.2 1.1 1.0
P/NTA (x) 1.4 1.3 1.3 1.2 1.1
Net dividend yield (%) 4.4 6.6 5.9 6.0 6.2
FCF yield (%) nm 3.6 nm 14.6 15.6
EV/EBITDA (x) 6.6 4.8 5.7 5.2 4.8
EV/EBIT (x) 9.4 6.1 7.8 7.0 6.5
INCOME STATEMENT (USD m)
Revenue 980.6 1,038.8 1,206.5 1,283.8 1,297.7
EBITDA 281.5 399.1 429.5 446.1 452.9
Depreciation (82.3) (84.8) (114.3) (117.9) (120.1)
EBIT 199.2 314.3 315.2 328.2 332.8
Net interest income /(exp) 2.5 (7.1) (27.5) (36.3) (31.4)
Pretax profit 197.0 330.4 287.8 291.9 301.4
Income tax (44.6) (72.3) (69.1) (70.1) (72.3)
Minorities (7.0) (12.3) (10.9) (11.1) (11.5)
Reported net profit 145.4 245.8 207.8 210.8 217.6
Core net profit 146.3 228.1 207.8 210.8 217.6
BALANCE SHEET (USD m)
Cash & Short Term Investments 162.9 157.2 203.8 356.5 523.6
Accounts receivable 42.7 50.7 94.2 100.2 101.3
Inventory 119.8 160.2 183.5 199.0 201.7
Property, Plant & Equip (net) 1,115.4 1,207.6 1,702.1 1,654.2 1,604.2
Intangible assets 102.8 98.1 74.1 74.1 74.1
Other assets 231.3 278.0 353.5 353.5 353.5
Total assets 1,774.8 1,951.8 2,611.2 2,737.5 2,858.4
ST interest bearing debt 111.7 86.8 474.8 474.8 474.8
Accounts payable 84.8 114.2 141.0 152.9 154.9
LT interest bearing debt 126.0 183.4 303.4 303.4 303.4
Other liabilities 51.0 80.0 93.0 94.0 96.0
Total Liabilities 373.1 464.3 1,012.1 1,025.3 1,029.3
Shareholders Equity 1,303.4 1,379.5 1,483.3 1,588.7 1,697.6
Minority Interest 98.4 108.1 115.7 123.5 131.5
Total shareholder equity 1,401.8 1,487.5 1,599.1 1,712.2 1,829.1
Total liabilities and equity 1,774.8 1,951.8 2,611.2 2,737.5 2,858.4
CASH FLOW (USD m)
Pretax profit 197.0 330.4 287.8 291.9 301.4
Depreciation & amortisation 82.3 84.8 114.3 117.9 120.1
Adj net interest (income)/exp (2.5) 7.1 27.5 36.3 31.4
Change in working capital 116.9 (41.7) (50.0) (48.0) (34.6)
Cash taxes paid (80.0) (46.7) (69.1) (70.1) (72.3)
Other operating cash flow 1.1 (22.7) 0.0 0.0 0.0
Cash flow from operations 314.8 311.2 310.5 328.0 346.0
Capex (382.2) (251.1) (522.0) (70.0) (70.0)
Free cash flow (67.4) 60.1 (211.5) 258.0 276.0
Dividends paid (171.1) (84.1) (103.9) (105.4) (108.8)
Equity raised / (purchased) (4.4) (16.2) 0.0 0.0 0.0
Change in Debt (111.2) 30.1 362.0 0.0 0.0
Other invest/financing cash flow 30.8 6.6 0.0 0.0 0.0
Effect of exch rate changes 0.5 (2.0) 0.0 0.0 0.0
Net cash flow (322.8) (5.4) 46.6 152.7 167.2

Key Ratios

FYE 31 Dec FY23A FY24A FY25E FY26E FY27E
Key Ratios
Growth ratios (%)
Revenue growth (20.0) 5.9 16.1 6.4 1.1
EBITDA growth (44.6) 41.8 7.6 3.9 1.5
EBIT growth (53.6) 57.8 0.3 4.1 1.4
Pretax growth (53.9) 67.7 (12.9) 1.4 3.3
Reported net profit growth (55.3) 69.1 (15.5) 1.4 3.3
Core net profit growth (56.2) 55.9 (8.9) 1.4 3.3
Profitability ratios (%)
EBITDA margin 28.7 38.4 35.6 34.7 34.9
EBIT margin 20.3 30.3 26.1 25.6 25.6
Pretax profit margin 20.1 31.8 23.9 22.7 23.2
Payout ratio 51.4 45.4 50.0 50.0 50.0
DuPont analysis
Net profit margin (%) 14.8 23.7 17.2 16.4 16.8
Revenue/Assets (x) 0.6 0.5 0.5 0.5 0.5
Assets/Equity (x) 1.4 1.4 1.8 1.7 1.7
ROAE (%) 11.1 18.3 14.5 13.7 13.2
ROAA (%) 8.1 12.2 9.1 7.9 7.8
Liquidity & Efficiency
Cash conversion cycle 52.5 40.8 45.2 49.0 50.4
Days receivable outstanding 25.9 16.2 21.6 27.3 27.9
Days inventory outstanding 74.8 85.0 91.5 93.8 97.0
Days payables outstanding 48.2 60.4 67.9 72.1 74.5
Dividend cover (x) 1.9 2.2 2.0 2.0 2.0
Current ratio (x) 1.9 1.9 0.9 1.2 1.4
Leverage & Expense Analysis
Asset/Liability (x) 4.8 4.2 2.6 2.7 2.8
Net gearing (%) (incl perps) 5.3 7.6 35.9 24.6 13.9
Net gearing (%) (excl. perps) 5.3 7.6 35.9 24.6 13.9
Net interest cover (x) na 44.2 11.5 9.0 10.6
Debt/EBITDA (x) 0.8 0.7 1.8 1.7 1.7
Capex/revenue (%) 39.0 24.2 43.3 5.5 5.4
Net debt/ (net cash) 74.9 112.9 574.3 421.7 254.5


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