Analysts have shown mixed reactions after First Resources reported 2HFY2020 earnings of US$53 million ($70.5 million), down 7% y-o-y. The decrease in earnings was caused by lower than expected crude palm oil (CPO) prices due to forward sales transactions and higher inventory build-up due to heavy rainfall, among other factors.
RHB has downgraded its rating from ‘buy’ to ‘neutral’ with a lower target price of $1.60 from $1.90 previously, despite the company’s FY2020 results being in-line with its expectations. The downgrade reflects the brokerage’s belief that the company’s “aggressive” forward sales could be detrimental to FY2021 earnings potential.
