Bumitama Agri Ltd (BAL SP) <Result Analysis> Exceeding our estimates on strong productivity trend
- Bumitama (BAL) posted net profit of Rp2,449bn (-21.6% y-o-y) in line with consensus, beating our estimates <by 10%>
- BAL’s good estates productivity tackled the lower CPO price trend well in 2023
- Maintain BUY with TP of S$0.90
What’s new
FY23 reported net profit reached Rp2,449bn (-21.6% y-o-y), in line with consensus but beating our estimates. 4Q23 reported net profit reached Rp386bn (+33.8% y-o-y, -55.7% q-o-q) and it sent FY23 net profit to Rp2,449bn (-21.6% y-o-y) , beating our estimates (110% DBS FY23F, 101% consensus’) . Top line reached Rp3,639bn in 4Q23 (+11.3% y-o-y,-15.5% q-o-q), in line with our estimates and it was primarily driven by CPO selling price and sales volume of Rp10,832/kg (-4.1% y-o-y, +0.3% q-o-q) and 300.8k MT (+15.7% y-o-y, -16.8% q-o-q). BAL’s 4Q23 sales volume was in line with its CPO production performance of 320.9k MT (+21.3% y-o-y, -8.7% q-o-q). BAL consistently posted good productivity trend , reflected by its FY23 fruits (FFB) yield of 20.6MT/ha (FY22: 21.4MT/ha) with CPO extraction rate of 22.7% (FY22 : 22.3%) respectively.
Our view
We maintain our BUY rating with an unchanged TP of S$0.90. BAL is trading at FY24F PE of 5.7x, a 54% discount vs. upstream peers despite its superior operational and financial metrics. Our DCF TP of S$0.90 implies an FY24F PE of 8.2x, +2SD of its five-year average PE multiple, which is in line with Singapore listed palm oil companies average FY24F PE multiple of 7.7x. BAL’s overall FY23 earnings performance last year showed that its firm estates’ productivity helped the company weather CPO price volatility well. Judging from its 4Q23 earnings performance and selling price trend, we believe BAL could exceed our FY24F earnings forecast of Rp2,270bn (-7% y-o-y), which is still based on a CPO selling price and sales volume assumptions selling price of Rp10,146/kg (-6.3% y-o-y) and 1.13m MT (-9% y-o-y) respectively.
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