Bumitama Agri - Maybank Kim Eng 2021-05-11: A Slow Start To 1Q21

SGinvestors.io

BUMITAMA AGRI LTD. (SGX:P8Z)

Bumitama Agri - A Slow Start To 1Q21

Forward sales dragged down 1Q21 headline PATMI

• Bumitama Agri (SGX:P8Z)'s 1Q21 headline PATMI came in within our/consensus expectations, impacted mainly by forward sales commitments. We expect significantly stronger earnings in 2H21 as Bumitama Agri’s output seasonally peaks in 2H and as we are not aware of any forward sales in 2H21. We make no changes to our EPS forecasts.
• We maintain our BUY call with an unchanged target price of S$0.65 for Bumitama Agri on 12x FY21E PER peg (its updated 5-yr mean).
• Bumitama Agri trades at single-digit PER with attractive net dividend yields of above 4.0%.

1Q21 within our/ consensus expectations

• Similar to last year, Bumitama Agri provided an executive summary of key financial and operational information on its 1Q21 performance. It reported a 1Q21 headline PATMI of IDR167b (-36% y-o-y) which met 17%/16% of our/consensus full-year forecasts.
• Despite posting stronger revenue (+14% y-o-y), we believe 1Q headline PATMI was weaker largely due to forward sales impact, and to a lesser extent some FX losses on its US debt (as Rupiah weakened against US$ by 3.4% q-o-q).

Forward sales effect to last till 2Q21

• As reported in last quarter’s results review, Bumitama Agri sold forward ~200,000mt or 35% of its FY21E nucleus output at an average price of IDR8,364/kg, to be delivered between Jan and June 2021. These contracts were entered prior to the restructured Indonesia export tax structure in Dec 2020 and it specified that Bumitama Agri is to bear the difference between the prevailing statutory export taxes (in the month of delivery) and the agreed upon US$55/t export tax. This negative contract clause ate into Bumitama Agri’s EBITDA margin in 1Q21 and will continue to impact its 2Q21 margin if the CPO export taxes remain high.

Brighter prospects in 2H21

• Positively, Bumitama Agri chalked up a strong FFB nucleus output recovery at 611,382t (+26% y-o-y), which met 24% of our full-year forecast. It is keeping its FFB growth guidance of 10% for 2021E (MKE: +10%). As we are not aware of any forward sales in 2H21, Bumitama Agri earnings is expected to play strong catch up in 2H21, which coincides with its peak output.
• See
  • Bumitama Agri's Share Price,
  • Bumitama Agri's Target Price,
  • Bumitama Agri's Analyst Reports,
  • Bumitama Agri's Dividend History,
  • Bumitama Agri's Announcements,
  • Bumitama Agri's Latest News.

Ong Chee Ting CA Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2021-05-11

SGX Stock Analyst Report BUY MAINTAIN BUY 0.650 SAME 0.650