CPO price increase — CPO prices recently rallied above US$600/t following lower-than-expected end-inventory levels in Malaysia. Soybean production /export issues in Argentina, a weaker dollar, and CPO discount to key vegetable oil substitutes are also supportive of prices. We accordingly raise our 09E CPO price assumption to US$610/t from US$550/t.

Low-cost producer with focus on cost management — FR is a low-cost producer with US$200/ton cash cost (nucleus). Management also continues to express its commitment to remaining prudent in cash management. New plantings of 8-12k Ha are planned. US$60m is earmarked for overall 09 capex.

Clearer growth prospects — With plantation age averaging 7.5 years (early phase for optimum yield), an enhanced yield from maturing trees provides favourable growth prospects. We expect FR to deliver 4.7% 3-year volume CAGR through 2011E. This, along with FR's expressed commitment to managing costs, should provide downside protection.

Earnings revision — As a CPO play, FR is set to benefit from any increase in CPO prices. In this regard, our CPO price increase and lower tax rate assumptions lead to a 17-38% increase in NP for FY09E-11E.

Maintain Buy (TP: S$0.59) — Given the above positives, we continue to see value in FR. We maintain our Buy rating and raise our target to S$0.59 (was S$0.57). We revise our risk rating from Speculative to High given an improved CPO outlook for 09E. As a CPO play, FR in our view should benefit.