First Resources - RHB Invest 2024-08-14: Good Catch-Up In 2Q24

• First Resources (SGX:EB5)'s 2Q24 results were largely in line with our expectations. Going into 2H24, productivity should improve while costs decline, but downstream margins could reverse back to the red unless policy changes are instituted.
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2Q24 core net profit surge 88% y-o-y

• First Resources recorded a 45% q-o-q (+88% y-o-y) surge in core net profit in 2Q24. This came in largely in line with our and Street’s forecasts – at 53% and 49% of FY24 estimates – on higher FFB production volume and the downstream segment returning to the black.
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Analysts briefing highlights:

2Q24 FY24 nucleus FFB production rose by 11.7% q-o-q (+6.4% y-o-y), bringing 1H24 FFB output growth to 6.7% y-o-y.

• This was above management’s guidance of ~5% and our forecast of 3.5% growth for 2024. Weather conditions have normalised and First Resources is expecting output to see the normal seasonal peak in 3Q24. However, it maintains its FY24 FFB growth assumption at 5%.
• We make no changes to our conservative FFB growth assumptions of 3.5%, 3.9%, and 2.7% y-o-y for FY24-26;

First Resources recorded a 1H24 net inventory drawdown of 44,000 tonnes.

• Read more at SGinvestors.io.

Singapore Research RHB Securities Research | https://www.rhbgroup.com/ 2024-08-14 SGinvestors.io

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