BUMITAMA AGRI LTD. (SGX:P8Z)
Bumitama Agri - Strong 4Q21 On Better-Than-Expected CPO ASP
A beneficiary of spot prices in FY22E
- Bumitama Agri (SGX:P8Z)'s FY21 core PATMI beat ours and street estimates by 10% on better CPO prices. As Bumitama Agri has little forward sales commitment in FY22E, it is poised to benefit from high CPO spot prices (coupled with higher FFB output growth guidance).
- Following our EPS upgrade, we reiterate our BUY call on Bumitama Agri with a higher target price of S$0.98 after rolling forward our valuation to FY23E on unchanged 11x PER peg, its 5-year mean (from S$0.93 on 11x FY22 PER).
- Bumitama Agri's Share Price trades at just 8x PER with attractive dividend yields of ~5%.
Bumitama Agri's FY21 core PATMI beat estimates by 10%
- Stripping aside FX gain (IDR72b) and fair value gain of biological asset (IDR82b), Bumitama Agri posted a 2H21 core PATMI of ID1,117b (79% y-o-y) that lifted FY21 core PATMI to IDR1,687b (+47% y-o-y).
- The strong 2H21 earnings were mainly lifted by high CPO ASP (Rp11,683/kg; +40% y-o-y) and PK ASP (Rp7,342/kg; +62% y-o-y) which more than offset lower sales (-7% y-o-y) while 2H21 output fell -16% y-o-y (Figs.2-3) due to seasonal crop pattern changes.
Guiding for 5-10% FFB growth for FY22E
- In terms of FFB output, Bumitama Agri is targeting 5-10% FFB growth for FY22E (MIBG Research: +7% y-o-y). It is expecting crop pattern to normalise in FY22E with 1H:2H output at 48%:52%. We understand Bumitama Agri has little forward sales commitment in FY22E (that was locked-in earlier in FY21). Hence, Bumitama Agri is poised to benefit from present lofty spot prices.
Upgrading EPS forecasts mainly on higher CPO ASP
- Bumitama Agri guides that its unit cash cost of production for FY22E will likely go up by 20-25% y-o-y (FY21: Rp4,500/kg). In our FY22E forecast, we have assumed a 20% y-o-y increase in unit cost. And following our industry-wide CPO ASP revisions to MYR4,100/t (from MYR3,200/t) for 2022E and MYR3,200/t (from MYR3,000/t) for 2023E, we raise our FY22E core PATMI forecasts for Bumitama Agri by 12% while keeping our FY23E forecast unchanged.
- We also introduce our FY24E EPS forecast. Bumitama Agri will propose a final dividend right before its AGM.
- Based on Bumitama Agri’s dividend payout policy of paying up to 40% of PATMI, its final dividend for FY21 may potentially be S$0.0325 (in addition to S$0.0045 interim dividend paid earlier).
- See
Ong Chee Ting CA
Maybank Research
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https://www.maybank-ke.com.sg/
2022-02-28
SGX Stock
Analyst Report
0.980
UP
0.93
