Bumitama Agri - Maybank Research 2022-08-14: 1H22 Results Outperformed Expectations


Bumitama Agri - 1H22 Results Outperformed Expectations

  • Despite Indonesia’s export ban and restrictions, Bumitama Agri (SGX:P8Z)’s 1H22 core PATMI beat ours and consensus expectations on better-than-expected CPO ASP, low unit cost, and strong output.
  • Going forward, we expect Bumitama Agri's earnings to soften in 2H22 following recent CPO price correction and higher fertiliser cost expectation.

Bumitama Agri's 1H22 results boosted by high CPO ASP and lower cost

  • Bumitama Agri reported 1H22 headline PATMI of IDR2,179b (+350% y-o-y). Adjusted for FX loss, 1H22 core PATMI of IDR2,276b (+300% y-o-y) met 114% and 96% of our and consensus full-year estimates respectively.
  • The better-than-expected 1H22 PATMI was mainly due to
    1. better-than-expected CPO ASP achieved of IDR14,327/kg (+75% y-o-y); especially 2Q22’s CPO ASP achieved of IDR14,923/kg (+74% y-o-y, +10% q-o-q) which was 11% above market price, and
    2. lower-than-expected cost which more than offset lower CPO sales (-7% y-o-y).
  • Had it not been for a net inventory build-up in 2Q (i.e. sales < output) due to the Indonesia’s palm oil export ban and restriction, headline profits would be even higher as 2Q nucleus output rose sharply by 19% y-o-y (+29% q-o-q).
  • We estimate its 1H22 unit operating cost at IDR3,250/kg (-38% y-o-y). It is unclear how much fertilizer has been applied in 1H22 (1H21: ~45% of full-year plan).

Raising our FY22E FFB growth forecast to 10% (from 5%)

  • 1H22 FFB nucleus output growth of +9% y-o-y (to 1.365mt which met 56% of our full-year forecast) was at the higher end of BAL’s previous growth guidance of +5%-10% y-o-y for FY22E.
  • We now raise our FY22E’s FFB nucleus growth forecast to +10% y-o-y (previously +5% y-o-y). Following the higher base of FY22E, our FY23E-24E absolute FFB output have also been raised by 5%/ 5% respectively.

Raising Bumitama Agri's FY22E-24E EPS forecasts by 15%-41%

BUY Bumitama Agri for its attractive valuation & dividend yields

  • Still, Bumitama Agri remains a BUY given its single-digit P/E ratio and attractive dividend yields. Our target price for Bumitama Agri is S$0.88 on 8x FY23 P/E, -0.5 standard deviation its 5-year mean.

Ong Chee Ting CA Maybank Research | https://www.maybank-ke.com.sg/ 2022-08-14
SGX Stock Analyst Report BUY MAINTAIN BUY 0.88 DOWN 0.980