First Resources poised to report dried up earnings as El Niño drags on: analysts

Yield recovery will have to wait, analysts say.

The dry season is still taking a toll on the agribusiness company, as analysts say FFB yield recovery for the firm will be much slower than expected.

According to a report by UOB Kay Hian, FFB production is still down by 15.6% yoy, while nucleur production of 917,038 is also down by 15.9%.

“We are revising down our FFB nucleus production growth forecast from -3.2% yoy to -9.6% yoy after factoring in weaker 1H16 production and a late production recovery,” the report said.

However, the report said the company will have to wait until next year to register notable FFB production growth. UOB Kay Hian said First Resources are expecting a 17.9% growth for 2017 assuming FFB yield recovers by 8% from 2016.

“With a large percentage of young and prime age areas (52% of total planted areas), FR is likely to experience a good yield recovery. However, our FFB production forecast for 2017 is only at a similar level to 2015’s despite FR having larger mature areas,” UOB Kay Hian added.