BUY for Its Attractive Valuation & Dividend Yields

• Bumitama Agri (SGX:P8Z)'s 1Q22 PATMI exceeded expectations. The impact of Indonesia’s export ban on Bumitama Agri’s sales is still unclear as it has not made new sales in May, in part due to the week-long Raya festivities. But it has sufficient storage capacity to last another month.
• Bumitama Agri expects output trend to normalise this year with 1H:2H FFB output ratio at 47:53. The higher output in 2H will help weather fertiliser cost pressures (on a per unit cost basis).

Bumitama Agri's 1Q22 Results Lifted by High CPO ASP Achieved

• Similar to last year, Bumitama Agri provided an executive summary of key financial and operational information on its 1Q22 performance. It reported a 1Q22 headline PATMI of IDR873b (+424% y-o-y, +35% q-o-q) which met 44%/43% of our/consensus full-year forecasts. This was achieved on the back of stronger revenue (+69% y-o-y, +4% q-o-q) buoyed by higher CPO ASP achieved (IDR11,900/kg; +80% y-o-y, +40% q-o-q). Recall that Bumitama Agri's 1Q21 headline PATMI was hurt by the impact of its forward sales commitment.
• We understand Bumitama Agri has applied ~25% of its full-year fertiliser requirement in 1Q22. For FY22E, Bumitama Agri maintains its unit cost of production guidance to be higher by 20-25% y-o-y, following fertiliser price hike. Bumitama Agri has locked-in its full-year fertiliser requirements which averages 70% higher than last year.

Still Guiding for 5-10% FFB Growth for FY22E

• Bumitama Agri maintains its +5%-10% FFB growth expectation for FY22E (MIBG Research: +5% y-o-y) although 1Q22 posted lower y-o-y FFB nucleus output (596,309t; -3% y-o-y, +19% q-o-q) due to the high base effect of last year (which had an abnormal cropping pattern last year). Still, 1Q22 FFB output has met 24% of our full-year forecasts, broadly within our expectation.

Export Ban Impact Unclear for Now

• Bumitama Agri has not made new sales price of S$0.98 on 10x FY23 PER, its 5-year mean.

Source: Maybank Research - 12 May 2022