- First Resources (SGX:EB5) has doubled its growth engines with decent CPO price outlook and volume growth from ANJ’s acquisition.
Decent CPO price outlook
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- Indonesia is set to raise its biodiesel blending rate to B50 (B40 this year). Meanwhile, supplies are likely to remain weak due to slower-than-expected replanting in both Indonesia and Malaysia’s palm oil estates.
- First Resources has a track record in maintaining decent profitability and ROE performance. Its output outperformed even peers during the late impact of El Nino in 2024. Now, beyond the existing estate replanting, First Resources is expanding its game via acquisitions – a test of whether it can deliver what it did with inorganic growth.
ANJ plantation acquisition – an inorganic boost
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- Despite its decent CPO yield per MT performance, ANJT’s profitability trended lower than FR’s net profit margin and ROE performance. Its net profit margin reached only 3.9% with an ROE of 2.3%, lower vs First Resources’ net profit margin of 21.3% and ROE of 18.3%, respectively, in 2024 This is what First Resources’ improvement will be focusing on, especially cost and estate management.
We revise up our FY25F and FY26F earnings forecast by 48% and 62%, mainly to incorporate the ANJT acquisition.
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