RHB understands that FR intends to revamp the entire landbank by undertaking replanting, with replanting cost-to-maturity at US$5,000 to US$6,000 per hectare. By deducing the approximate cost of mill assets and assuming the landbank is 80% plantable, the analysts expect the plantation landbank to cost FR around US$7,850 per hectare.
RHB Bank Singapore analysts maintain “neutral” on First Resources (SGX:EB5
) (FR) following the planter’s successful bid for 17,600 hectares of landbank and assets in Riau, a province on the central east coast of Sumatra, Indonesia.
FR’s bid for the assets held by Tri Bakti Sarimas was at a cash consideration of IDR1.9 trillion ($119.8 million). The assets include mills, plantations and unplanted landbank. The acquisition will be fully funded by First Resources’ internal reserves.
