Bumitama  Agri  (BAL)  remains  one  of  our  favourite  plantation  stocks. Although  its  production  growth  this  year  came  in  below  expectations, the weakness is likely to be temporary as the  age profile of its trees is supportive of strong double-digit growth. The group's FY14 P/E, at 13x, is  inexpensive  and  will  contract  further  over  time.  Maintain  BUY,  with our TP slightly raised to SGD1.18 (from SGD1.16). 

- Largely  in  line.  BAL's 9M13 core earnings  of  IDR508.7bn were  largely in  line  with  our  expectations,  making  up  68%  of  our  full-year  net  profit forecast. Our full-year numbers imply that the company needs to register IDR240bn in core earnings for 4Q, vs IDR189bn in 3Q. We believe this is achievable, given the seasonally stronger 4Q production.  

- Moderate  production  growth  for  FY13.  BAL's  nucleus  production growth  rose  by  17.9%  YTD,  falling  short  of  our  full-year  expectation  of 25.1%.  We  trim  our  FY13  production  estimate  to  1.13m  tonnes,  which reflects  an  18.9%  y-o-y  increase.  Our  revised  numbers  imply  that  4Q production needs to rise by 20% against last year.  

- Raising IDR-based CPO price to compensate for weak currency. We nudge  up  our  IDR-based  CPO  ASP  to  IDR6,932  per  kg  for  FY13  (from IDR6,660) and IDR7,724 per kg for FY14 (from IDR6,981) to reflect the weaker  IDR.  These  numbers  represent  a  5%/3%  discount  against  the CPO  price  we  factored  into  Astra  Agro  Lestari  (AALI  IJ,  BUY,  FV: IDR25,245) for FY13/FY14.   

- Net profit adjustment. Our FY13 earnings forecast remains unchanged at  IDR749bn,  but  our  FY14F  core  earnings  are  raised  to  IDR1,203bn from  IDR1,003bn.  Despite  the  sharp  increase  in  IDR-denominated  net profit for FY14, our FV rises by just two cents to SGD1.18, as we factor in a higher exchange rate of IDR9,286 per SGD for CY14.

Bumitama  Agri  (BAL)  is  a  high-growth  oil  palm  plantation  company  with  all  its  plantations  in  Indonesia.  It  has  113k  ha  of  nucleus planted area. The group, which was listed on the Singapore stock exchange on 12 April 2012, started initial planting in 2004 with 5,023 ha of nucleus area. It has, to date, planted a total of 101,182 ha of nucleus area across Sumatra and West and East Kalimantan. The company was started and controlled by the Hariyanto family, which still holds a 50.9% stake. The Hariyanto family started out in mining and timber, although oil palm plantation is now its main business.

Source: OSK