Bumitama Agri - Maybank Kim Eng 2020-08-16: 1H Beat Expectations

BUMITAMA AGRI LTD. (SGX:P8Z)

Bumitama Agri - 1H Beat Expectations

Bumitama Agri (SGX:P8Z)'s 1H20 core PATMI of IDR519b (+217% y-o-y) beat our/consensus expectations. We expect 2H20 core PATMI to be broadly similar to 1H20 as seasonally higher output is expected to be accompanied by higher cost (ie fertiliser application to catch up in 2H20), and a normalisation of effective tax rate.
Following our EPS revisions, Bumitama Agri is a BUY with a new Target Price of SGD0.74 (previously SGD0.78) on unchanged 14.5x FY20E PER, its 5-year mean.
Bumitama Agri declared an interim DPS of 0.4 cents (payable: 17 Sept).

Bumitama Agri reported 1H20 headline PATMI of IDR441b (+88% y-o-y). Adjusted for FX loss, 1H20 core PATMI of IDR519b (+217% y-o-y) met 57%/61% of our/ consensus full-year estimates. The strong 1H20 earnings were mainly due to
1. higher CPO ASP achieved of Rp8,328/kg (+27% y-o-y) which more than offset weaker FFB output growth (-4% y-o-y),
2. lower-than-expected fertiliser applied at 45% of full-year plan (1H19: ~54%), and
3. to a lesser extent, lower-than-expected effective tax rate of 21%.

Bumitama Agri has lowered its FY20 FFB growth guidance to -5%-0% y-o-y (earlier guidance: up to +10% y-o-y FFB growth) following weaker-than-expected 1H20 output (-4% y-o-y), inline with peers’ experience. Still, Bumitama Agri anticipates 1H:2H FFB output ratio at 45:55.
But unlike the past 2 years whereby output peaked in Q3, Bumitama Agri anticipates FFB output to peak only in 4Q20. As such, we cut our 2020 FFB output by 8% (implying +1% y-o-y growth; from +10% y-o-y).
We have also trimmed our 2021-22 FFB output by 4%/2%, which now implies a +10%/+5% y-o-y FFB growth for FY21-22E.

Following our 2020 industry-wide CPO ASP revision to MYR2,400/t (from 2,300/t) and coupled with Bumitama Agri’s output cut, we adjusted our FY20-22E EPS by +4%/-7%/-2% respectively.
Bumitama Agri currently trades at less than 10x forward PER for a strong 2-year earnings CAGR potential of 41% and ~USD7,400/planted ha, near new replacement costs. BUY.
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 | https://www.maybank-ke.com.sg/ 2020-08-16

SGX Stock Analyst Report BUY MAINTAIN BUY 0.74 DOWN 0.780