BUMITAMA AGRI LTD. (SGX:P8Z)
Bumitama Agri - Off To A Good Start
Bumitama Agri adopts half-yearly financial reporting
- Bumitama Agri (SGX:P8Z)'s 1Q20 core PATMI beat our/consensus expectations. We anticipate weaker Q2 and Q3 results on low CPO price before better earnings in Q4 when output typically peaks. Hence, we maintain our earnings forecasts.
- Bumitama Agri is a BUY with an unchanged Target Price of SGD0.78 on 14.5x FY20E PER, its 5Y mean. It currently trades at less than 10x forward PER for a strong 2-year earnings CAGR potential of 47% and ~USD6,700/planted ha, below new replacement costs.
Strong 1Q core performance
- Bumitama Agri has decided not to continue with its quarterly reporting (as permitted by SGX) and instead provided an executive summary of key financial and operational information on its 1Q20 performance. Bumitama Agri reported a 1Q20 PATMI of IDR262b (+137% y-o-y, flat q-o-q) which met 29%/31% of our/consensus full-year forecasts.
- The higher profits y-o-y were on the back of stronger revenue (+20% y-o-y, -12% q-o-q) driven mainly by higher CPO price (+33% y-o-y, +22% q-o-q) and to a lesser extent PK price (+9% y-o-y, +37% q-o-q). Had it not been for some FX losses on its US debt, its core PATMI would have been higher.
- Bumitama Agri did not disclose the FX loss recorded in 1Q20 but it would have been sizeable as Rupiah had weakened against USD by ~18% q-o-q. Adjusted for FX loss, 1Q core PATMI would have beaten our and consensus expectations.
1Q output off to a slow start
- FFB nucleus output was flattish y-o-y at 483,641t (-15% q-o-q) and met just 20% of our full-year forecast. Bumitama Agri is keeping its FFB growth guidance of up to 10% for 2020E (MKE: +10%), expecting higher output in 2H.
1Q fertiliser application stayed on course
- It is also maintaining its 2020 cost guidance at 0-5% y-o-y higher than 2019’s cost of Rp4,361/kg. As for fertiliser, we understand its 1Q rate of application has stayed in line with the programme set out at the beginning of the year, and roughly similar to last year. In 1Q19, Bumitama Agri administered 35% of its full-year requirement.
- See Bumitama Agri Share Price; Bumitama Agri Target Price; Bumitama Agri Analyst Reports; Bumitama Agri Dividend History; Bumitama Agri Announcements; Bumitama Agri Latest News.
Ong Chee Ting CA
Maybank Kim Eng Research
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https://www.maybank-ke.com.sg/
2020-05-12
SGX Stock
Analyst Report
0.780
SAME
0.780
