- The sector is at a crossroads. With rising costs, falling yields and little chance for landbank expansion, planters need to do a lot more to boost their bottomlines – so, is diversification the key?
- First Resources (SGX:EB5) may be able to diversify via further downstream ventures, but more needs to be done to improve profit per ha.
Face the hard facts, and adapt.
- - Read this at SGinvestors.io -
- CPO prices have risen to highs unseen in the last 10 years, but there is always a risk that extenuating circumstances can push prices down to below breakeven cost levels. We expect long-term CPO prices per tonne to be at the higher end of MYR3,000- 3,500 and above (historical average: MYR1,800-2,000), but prices are likely to stay volatile. As this is not within the planters’ control, they need to focus more on revenue growth, cost control and potential diversification efforts.
Diversification may be the name of the game, going forward.
- - Read this at SGinvestors.io -
- With landbank monetisation like data centres or renewable energy ventures like solar farms now being a feasible diversification, this may change going forward – if more planters opt to engage. We estimate profitability/ha/year for solar is 26x more than oil palm.
On top of diversification
- Read more at SGinvestors.io.
Singapore Research RHB Securities Research | https://www.rhbgroup.com/ 2024-08-12
Read also RHB's most recent report:
2024-08-14 First Resources - Good Catch-Up In 2Q24.
Price targets by 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
