First Resources - Good Chance To Buy On Dip
- First Resources's share price has corrected by ~ 20% in November, presenting a good buying opportunity. Amid a current high CPO price trend, we believe First Resources (SGX:EB5) has room to deliver strong earnings in 4Q21 and 2022.
- We maintain our FY22 earnings forecast despite the higher CPO selling price assumption, to buffer against any unexpected cost escalation especially on fertilizers. We forecast earnings to expand 8.6% y-o-y to US$146m in 2022.
- First Resources has been trading below its 5-year average P/E multiple due to a narrowing CPO yield premium vs peers. However, we believe those concerns are well priced in at the current share price level. Stronger earnings growth ahead should help First Resources’s P/E multiple rerate above -1 standard deviation, in our view.
- Upgrade First Resources to BUY with unchanged target price of S$1.83.
Above is the excerpt from report by DBS Group Research.
Clients of DBS may access the full report in PDF @ https://www.dbs.com/insightsdirect/.
William Simadiputra DBS Group Research | Singapore Research Team DBS Research | https://www.dbsvickers.com/ 2021-12-07 2021-12-07
Previous report by DBS Research:
2021-02-02 First Resources - Great Bargain For Prime Performance
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