- We maintain our BUY rating on First Resources (SGX:EB5) with 2024 DCF-based target price at S$2.0 (WACC: 11.8% TG: 2%) mainly on lower FY23/24F earnings forecast. Our target price implies 12.5x FY24F P/E, which is slightly higher its 5-year average P/E of 11.4x on recovering earnings outlook next year in 2024F, after a challenging year in 2023, especially in 1H23.
- - Read this at SGinvestors.io -
- First Resources's share price is trading at FY24F P/E of 9.5x, which is below its 5-year average P/E multiple, hence we believe the weaker earnings trend in 1H23 is already well priced in. In addition, we think that the valuation does not reflect the expected CPO price improvement in 2H23 as the general market is focused on the soft CPO price currently.
- - Read this at SGinvestors.io -
- First Resources was previously hit by changes in Indonesian regulations such as the progressive levies in 2021 and Domestic Market Obligation (DMO) in 2022 but given the stable regulatory framework ahead, we think First Resources earnings driver will rest purely on the palm oil price supply and demand dynamics.
Room for earnings and share price improvement in 2H23
- Read more at SGinvestors.io.
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 | https://www.dbs.com/insightsdirect/ 2023-07-11
Previous report by DBS:
2023-01-11 First Resources - Striving Amid Strong Productivity Outlook.
Price targets by 2 other brokers at First Resources Target Prices.
Listing of research reports at First Resources Analyst Reports.
Relevant links:
First Resources Share Price History,
First Resources Announcements,
First Resources Dividends & Corporate Actions,
First Resources News Articles
