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Three Things To Like About First Resources

It seems that palm oil is not exactly the flavour of the month, or even the flavour of year for that matter. But that is not to say that the commodity won’t come back into vogue one day.

When it does, First Resources (SGX: EB5) could be one to benefit because there are quite a few things to like about the company. Here are just three.

The first thing to like about First Resources is its high Return on Equity, which is in the mid to high double digits. Last year it was 14.5%, which means the palm oil producer delivered S$14.50 for every S$100 of shareholder money invested in the business.

The second thing to like about First Resources is the way its business is organised – vertically. The company plants, harvests and mills Fresh Fruit Bunches (FFB) into Crude Palm Oil (CPO) and palm kernel products.

But that’s not all it does. It processes CPO and palm kernel into palm-based products such as biodiesel and other secondary products. And there’s more. It is engaged in oil palm seed breeding too.

The third thing to like about First Resources is dividends. Last year, the company paid dividends of S$0.04 per share from earnings of S$0.14 per share. It retained around 65% of profits for reinvesting in the business, which implies an annual growth rate of around 9%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.