UOB KayHian

First Resources (FR SP)

Earnings Growth To Drive Performance

FR’s share price recovered 19% from its recent low after the company outperformed peers in 2Q16 and also because of its high leverage to the recovery of CPO prices.

FR should deliver better results in 2H16 vs 1H16, driven by higher production and better realised palm product prices.

FFB production picked up in June and July, with yoy decline narrowing to -10% in Jul 16 from -11.6% in Jun 16 and -25.9% yoy in Mar 16.

Maintain BUY. Target price: S$2.00.

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Phillip Securities

CNMC Goldmine Holdings Limited Sitting on a gold mine SINGAPORE | MINING | INITIATION

 Abundant resources and reserves at Sokor field with extracted gold grade higher than cut-off grade.

 Current minimum ore processing capacity is expected to be ramped up in the upcoming future, from the current 1.2mn tonnes per annum.

 All-in sustaining cost and All-in cost trended down over the past 5 years and are currently maintained at around US$500/oz.

 Other resources such as Silver, Lead, and Zinc have yet to be explored, thus the value of these resources are not priced in yet.

 The acquisition of Pulai Project is awaiting to be sealed and expected to create positive synergies.

 We initiate coverage on CNMC with a Buy rating and a DCF-derived target price of S$1.03 using a cost of equity of 9.8%. Together with an estimated dividend of SG cents 1.4 for FY16, implied upside is 102.6%.

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Ezion Holdings: Strengthening relationships in Indonesia

Ezion Holdings has obtained a 49% stake in PT Pelita Bara Samudera (PBS), an Indonesian shipping company that was previously wholly-owned by Quvat Group, an Indonesianfocused PE firm. The JV has taken delivery of an oil product tanker which is on long-term charter with Pertamina. We understand from Ezion’s management that that the JV only has one vessel now and there are plans to grow the fleet; we also note that Ezion’s relationship with Pertamina would be strengthened from this move, which may present more opportunities for the group in future. However, PBS only has a tanker currently and Ezion’s share of the estimated profit from this is not significant compared to Ezion’s current yearly net profit. As mentioned in our earlier report, 3Q16 is also likely to be a lacklustre one for the group. Maintain HOLD with S$0.30 fair value estimate.


Auric Pacific Ltd A bread and butter investment

■ Auric is a diversified F&B play with a portfolio of well-established brands.

■ We expect Auric to return to sustainable profitability from FY16 onwards.

■ Its bread and butter business is a prized asset with leading market positions.

■ Management buying shares reveals confidence and commitment.

■ Significant net cash position at 48% of market cap.

Initiate coverage with Add.

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