First Resources - UOB Kay Hian 2023-11-14: 3q23 Results Slightly Below Expectation

• First Resources’s 3Q23 earnings came in slightly below our expectations, primarily attributable to a substantial inventory build-up on high production and some shipments being scheduled for Oct 24.
• - Read this at SGinvestors.io -
• higher CPO ASP, and
• improvement in downstream margin.

3Q23 results slightly below expectation.

• First Resources (SGX:EB5)'s 3Q23 net profit came in at US$51m (-2% q-o-q, -56% y-o-y), bringing 9M23 net profit to US$123m (-50% y-o-y). This accounts for 71% of our full-year forecast, slightly below our expectation.
• - Read this at SGinvestors.io -

Inventory build-up in 3Q23.

• The q-o-q decline in earnings in 3Q23 can be primarily attributed to a substantial inventory build-up, on higher production and the timing of shipment.
• Notably, over 50% of the accumulated inventory is in the form of CPO, and the majority of this build-up is merely a result of timing differences in delivery. This situation is poised to positively impact profit margins in the upcoming quarter, as the some of the sales of 3Q23 production would be booked in 4Q23, while the costs for these had already been charged out in 3Q23.

Downstream in the red in 3Q23.

• Read more at SGinvestors.io.

Jacquelyn Yow Hui Li UOB Kay Hian Research | Leow Huey Chuen UOB Kay Hian | https://research.uobkayhian.com/ 2023-11-14 SGinvestors.io

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