Bumitama Agri - Maybank Kim Eng 2020-04-27: Limited COVID-19 Impact On Its Operations

BUMITAMA AGRI LTD. (SGX:P8Z) | SGinvestors.io BUMITAMA AGRI LTD. (SGX:P8Z)

Bumitama Agri - Limited COVID-19 Impact On Its Operations


Attractively priced; BUY

  • We hosted Bumitama Agri (SGX:P8Z) management on a conference call last week which was participated by ~30 FM/analysts. Bumitama Agri is taking all necessary steps to ensure its workers safety amidst this COVID-19 pandemic. Operations at its estates are thus far normal.
  • Bumitama Agri remains a BUY with an unchanged Target Price of SGD0.78 on 14.5x FY20E PER, its 5Y mean.
  • It is trading at just 8x FY20E PER and ~USD6,200/planted ha, below new replacement costs.



Key takeaways from the conference call

  • Key takeaways from conference call with Bumitama Agri are:
    • There is no COVID-19 infected staff in their estates in Kalimantan and Sumatra;
    • Since early March, Bumitama Agri has implemented COVID-19 prevention measures such as practising 14-days quarantine for staff who returned to the estates after going on leave. It is also providing masks and sanitisers to workers and visitors, measuring body temperatures of external contractors and suppliers, and disinfecting vehicles that enter their premises;
    • Bumitama Agri is also working closely with the nearby villages to prevent the spread of COVID-19 from outside their concession areas;
    • The Indonesian government has banned “mudik” (or mass travel home) for the Raya celebration to restrict movement;
    • Bumitama Agri has yet to experience any logistical issues despite some partial lockdown being implemented;
    • Storage at their tanks are not overflowing but remains manageable;
    • Bumitama Agri does not export but sell locally to customers such as Wilmar (SGX:F34), Musim Mas, Asian Agri, and Sinar Mas. They have low default risks as customers pay upfront deposits before delivery;
    • Bumitama Agri makes no changes to its FFB growth guidance of up to 10% for 2020E (MKE:+10%);
    • Cost guidance per tonne is also unchanged at 0-5% y-o-y higher than 2019’s cost of Rp4,361/kg; and
    • Bumitama Agri targets to plant up to 1,000ha of new planting in 2020.


Trades at unprecedented -2SD of historical mean






Ong Chee Ting CA Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2020-04-27
SGX Stock Analyst Report BUY MAINTAIN BUY 0.780 SAME 0.780



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