First Resource

First Resources Limited (First Resources) is established in 1992 and listed in the Singapore Stock Exchange (SGX) on 9 December 2004. It is one of the leading palm oil plantation companies in Indonesia.

First Resources’ 2010 annual report has been analyzed to gauge how well the Group performed compared to previous years (2008 to 2009). In order to achieve a more holistic review of the financial strength of First Resources, its competitor, Kencana Agri Limited (Kencana) has been analyzed as a benchmark for comparison. Similar to First Resources, Kencana is a Singapore-based company listed on SGX on 25 July 2008. Its line of business is almost identical to First Resources’ palm oil production. The similarities in terms of operations and share prices in SGX make it a good benchmark to compare it with First Resources.

Using profitability, efficiency and solvency ratios, it can be seen that First Resources has performed well over the years, in terms of its financial strength and operation efficiencies. Furthermore, with the increase in global demand of palm oil, First Resources will continue to benefit greatly as an upstream plantation group. Its focus on high-quality plantation assets will allow the Group to benefit greatly from the increasing, high Crude Palm Oil (CPO) prices.

Business Overview

The Group’s primary business is cultivating oil palms, harvesting into Fresh Fruit Bunches (FFB) and produce Crude Palm Oil (CPO) and palm kernel for both local and export sales. The Group has more than 126,800 hectares of planted oil palm plantation and 9 palm oil mills, strategically located in the provinces of Riau and West Kalimantan, Indonesia. It is one of the youngest prime-producing plantations, and majority of the trees are in the immature and young stage, with weighted average of the trees being 8 years old. The maturity profile of its oil palm plantation is expected to increase the production yields over the next five years, with minimum increase...