Company Name: FIRST RESOURCES LIMITED
| Research House: CIMB | Price Call: BUY | Target Price: 2.30 |
Citigroup upgraded palm oil firm First Resources to ‘buy’ from ‘neutral’ and raised its target price to $2.30 from $1.98, citing higher volume growth and favourable prospects.
By 12:41 p.m., First Resources shares were up 1% at $1.97. They have gained 30.5% since the start of the year, versus a 17% drop in the FTSE ST Consumer Goods Index.
Current crude palm oil prices (CPO) are expected to continue rising, as the peak CPO production period has passed and upcoming year-end festivities should help mitigate concerns of high inventory, Citi said.
The brokerage increased its 2013-2014 earnings estimates for First Resources by 7-8%. Although its stock is trading at 10.8 times its 2013 earnings estimates, a premium relative to peers, Citi said this was justified due to its improving corporate governance and good growth prospects.
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