First Resource PresentationFirst Resource Presentation

16th March 2011

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Contents

Company Profile 1

Key Drivers2

Valuation Model3

Risk Analysis4

Recommendation5

Page 3

First Resource Company Profile

�One of Indonesia’s largest private producer of Crude Palm Oil (CPO), managing 132K Ha, spread across Riau and West Kalimantan

�Main products are Crude Palm Oil and Palm Kernel sold mainly to local refineries but the company has also added and expanding its own refining capacity and biodiesel production which is progressively coming online

Page 4

Company Key Drivers

�Positive on Growth in CPO prices (price)

�Excellent Age Profile of Plantation (Quantity)

�Substantial Land Bank to support its growth plans

Page 5

Commodities Valuation

�Revenue = Price X Quantity

�Price is dependent on Supply and Demand issues for the underlying commodities – in this case CPO prices

�Quantity is firm dependent, how much you can push out to the market – depends on plantation production

Palm Oil Market

Sunflower

8%

Rapeseed

16%

Palm Oil33%

Soyabean

26%

Others

17%

World Vegetable Oil productions 2010 % Share

Source: Oil World

Page 7

•33% of world vegetable oil market, gaining market share as the cheapest vegetable oil in the market

CPO Production

Page 8

Indonesia biggest producer of Palm Oil, 25.4 million tons in 2011 (50.24% of world palm oil output and about 16.57% of global edible oil consumption)

Source: Oil World & Indexmundi

Secular Story for CPO Remains Solid over Long Term

Source: Malaysian palm Oil Board (MPOB) and Jakarta Post

CPO remains the cheapest vegetable Oil Continued Strong demand growth coming from India and China

Page 9

CPO 10 Year Price Trend

Source: Bloomberg

� Prices are still 20% from its Peak and there is strong support to keep it above US$1000/ton

Page 10

Short Term Support

Page 11

Source: Bloomberg

�Substitute demand due to tight supply for Soybean and other edible oils. Driven by crop damage in major production countries (US and South America, 50% of World Soybean Production)

�Rising alternative use of Palm Oil and its byproduct such as bio-diesel demand in Argentina, Brazil and US

Age Profile of First Resource

Source: Company Data, 31st Dec 2011

� Average age of 8 years

� Implies another 21% moving into prime production age within 3 years and further growth momentum when 35% of immature plants move into production to support solid production growth rates in the next few years

Page 12

Substantial Land bank for expansion

Page 13

Source: Company Data

•155K ha of unplanted land in East Kalimantan

•Company plans to purchase another 100k Ha of land in West Kalimantan

•This means it has secure more than 100% more land for expansion and nearly a further 100% for future expansion which is enough for more than a decade of expansion

Valuation – Multi-stage FCFF

� High growth stage (2011 ~ 2013)

� CPO price forecast

� production forecast

� spreadsheet modelling

� Steady growth stage (2014 ~ 2016)

� Terminal growth (2017 and beyond)

Page 14

Valuation – High Growth Stage

Page 15

Valuation – Multi-stage FCFF

� Growth rate assumptions� High growth stage (2012 ~ 2014):

� Steady growth stage (2015 ~ 2016): 10%

� Terminal growth (2017 and beyond): 3%

� Discount rate assumptions

Page 16

Risk-free rate 4.9%

Beta (adjusted) 1.2

Equity risk premium 4.5%

Small-cap premium 2%

Cost of equity 12.3%

Cost of debt 12.73%

Effective tax rate 29%

WACC 12.34%

� 12m Target Price: S$2.23

Peer Analysis

Page 17

Source: Bloomberg Data

Risk Analysis

�Lower than expected CPO Prices

�Higher labor and fuel costs in Indonesia (70% to 80% of cost)

�Foreign exchange rate fluctuations (swings in USD and Rupiah)

�Regulations (across the world markets)

Recommendation

�“BUY”- First Resource is well positioned with its plantation profile and land bank to take advantage of the demand and supply imbalance in the CPO production environment for accelerated growth in earnings.

�Target price of $2.23 represents an additional 21% upside (current price taken as of $1.84 on 09 March 2012)