First Resources 4Q22 Results Preview - UOB Kay Hian 2023-02-07: Highest-Ever Yearly Profit

• We upgrade First Resources (SGX:EB5) to BUY on the back of:
  • its high dividend yield of 9.7% and 7.2% for 2022 and 2023 respectively,
  • it turning into net cash as of Dec 22, and
  • - Read this at SGinvestors.io -
• We reckon that the upstream performance would remain strong in 4Q22 with strong sales volume, while downstream performance could be lower q-o-q in 4Q22. However, refining margin should remain relatively stable.
• First Resources's share price has declined by 12% since our last downgrade in Nov 22. This may due to the recent weakening in CPO prices, which have dropped by 11% year-to-date. We interpret the recent drop in CPO prices as slower demand from importing countries. Hence, we see this an opportunity for investors to BUY First Resources.

First Resources 4Q22 results preview

• - Read this at SGinvestors.io -
• Healthy sales volume. We anticipate more sales volume in 4Q22 with higher drawdown, especially from China buyers due to the attractive CPO pricing in 4Q22. This is in line with management’s expectation of lumpy inventory level normalising in 4Q22.
• Stable refining margin. With CPO pricing remaining relatively stable in 4Q22, we expect refining margin to also remain stable. Refining margin would also be supported by the lower feedstock prices and strong export sales volume.

First Resources to turn to net cash position in 4Q22

• Read more at SGinvestors.io.

Jacquelyn Yow Hui Li UOB Kay Hian Research | Leow Huey Chuen UOB Kay Hian | https://research.uobkayhian.com/ 2023-02-07 SGinvestors.io

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