1Q14 results met our and market expectations.

An interim DPS of 1.3 SGD cts was declared.

Reiterate BUY with an unchanged TP of SGD1.38, based on 16x FY15E P/E.

Driven by output and better CPO ASP

Bumitama Agri (BAL) reported 1Q14 core net profit (excluding unrealised forex gain of IDR44b) of IDR275b (+69.3% YoY, -18.2% QoQ), which accounted for 23% and 22% of our and consensus fullyear forecasts, respectively. The impressive YoY profit growth was helped by (a) strong FFB nucleus output (+24.2% YoY), and (b) higher CPO ASP of IDR8,786/kg (+35.3% YoY), in part boosted by a weakened IDR against USD.

1Q14 FFB output met 22% of our full-year projection, in line with historical trends. Production usually peaks in the fourth quarter. An interim DPS of 1.3 SGD cts was declared, translating into a net yield of 1.1%.

Well liked for its long-term value proposition

We maintain our earnings forecasts as we expect sequentially stronger quarterly profits. We expect BAL to post a sterling EPS growth of 41% in FY14E, buoyed by a higher CPO ASP of IDR8,217/t (+15% YoY) and a 25% growth in FFB nucleus output.

We like BAL for its long-term value proposition, driven by its average young tree age of six years which will sustain a projected 21% FFB output CAGR (2013-2016), plantable reserves of 60k ha, and low cost of production. Maintain BUY with unchanged TP of SGD1.38, based on 16x FY15E P/E.

Source: Maybank Kim Eng Research - 12 May 2014