1Q15 NPAT US$29m (- 39% YoY, -53% QoQ), 16% FY15E consensus estimates (historical average contribution of 28% from FY12-14). Decline mainly due to lower ASPs and sales volumes of palm-based products, and a net inventory build-up of ~20kt in 1Q15 vs. net inventory drawdown of ~20kt 1Q14. Upstream EBITDA US$53m (-18% YoY, -32% QoQ), with downstream EBITDA at US$1.5m (-49% YoY, -72% QoQ).
■ Increased FFB bucks negative trend at peers
1Q15 FFB 581kmt (+16% YoY, -13% QoQ), and CPO production at 145kt (+10% YoY, -15% QoQ). Positive FFB growth bucked negative trends at peers, a function of FR’s lower base in 1Q14. Production volumes grew on yield recovery (FFB yield at 4 ton/ha, +0.2ton/ha YoY) and increased mature hectarage to 145k ha (+10% YoY, +10% QoQ). Planted hectarage increased to 197k ha (+10% YoY, +1% QoQ). Sales volume of CPO (148kt, -10% YoY, -17% QoQ) and PK (34kt, -1% YoY, -24% QoQ) decreased due to lower purchases of palm oil products from third parties (i.e., less refinery activities).
■ Lower contribution from downstream business
Refinery and Processing EBITDA contribution at US$1.5m, 3% of total EBITDA (1Q14 US$2.9m, 4% of total EBITDA), due to significant decrease in 1Q15 sales volume to 42kt (-67% YoY, -73% QoQ) on a slowdown of processing activities at FR’s refinery, fractionation and biodiesel plants in view of weak refining margins.
■ Maintain Buy rating and TP
FR remains our key ASEAN planter pick for its young plantation profile (weighted age 8 years) and its ~15% CAGR in planted hectarage, which provides future growth to its plantation segment earnings. (Read Report)
Source : Citi Research