Bumitama Agri - Maybank Kim Eng 2015-11-12: Weak results priced in

Bumitama Agri - Maybank Kim Eng 2015-11-12: Weak results priced in BUMITAMA AGRI LTD P8Z.SI 

Bumitama Agri - Weak results priced in 

  • 3Q15 results within our expectations but below consensus. Low CPO ASP achieved was mitigated by FFB output growth. 
  • FRS16, FRS 41 impact guidance within our expectations. Guides for 9% / 23% cut in 2014’s EPS / Equity respectively. 
  • Maintain HOLD for now with unchanged TP of SGD0.85 based on 13x 2016 PER. 

2015 FFB output growth lowered to 15% 

  • BAL reported a 3Q15 headline PATMI of Rp200m (-30% YoY, -8% QoQ). 
  • Stripping aside forex losses of Rp19.5b, its 3Q15 core PATMI was Rp214b (-27% YoY, -2% QoQ). This brings 9M15 core PATMI to Rp637b (-32% YoY) which met 68%/ 61% of ours (inline) / consensus (below expectations) forecasts. 
  • Weaker 3Q results was largely due to lower CPO ASP achieved of Rp6,746/kg (-17% YoY, -10% QoQ) mitigated by higher FFB nucleus output of 383,448 MT (+15% YoY, +8% QoQ). 
  • 3Q15 cash cost of production was lower at Rp2,932/kg (- 15% YoY, -42% QoQ) due to extensive fertilising in 1H15. 
  • BAL is revising down its 2015 target FFB growth to 15% (previously 20%) – now at the same level as our forecast. This follows an El Nino induced dry spell at BAL’s Kalimantan estates in the last 2 months which is likely to impact its FFB yield in early 2016. 
  • For 9M15, BAL’s FFB nucleus output grew 6.5% YoY to 1.08m MT. 

FRS16 / 41 impacts 2014’s EPS & Equity by 9% & 23% 

  • On the new FRS applications (effective 1 Jan 2016), BAL guides for an incremental annual depreciation of Rp110.3b - roughly in line with our Rp107.2b estimate (see our sector report dated 10 Aug). This implies an 8.9% cut in 2014 EPS. 
  • It also guides for Rp1,627.3b (-23%) reduction on Equity. This in turn will raise its 2014 net gearing ratio to 72% (from 56%). Hence, we make no changes to our 2016-17 earnings as we have already incorporated FRS16 & FRS41 effects. 
  • Maintain HOLD with unchanged TP of SGD0.85 based on unchanged 13x FY2016 PER (-1SD below 3yr mean).

Ong Chee Ting CA Maybank Kim Eng | http://www.maybank-ke.com.sg/ 2015-11-12
Maybank Kim Eng SGX Stock Analyst Report HOLD Maintain HOLD 0.85 Same 0.85