Towards Financial Freedom
Bumitama Agri - Another Consensus Beater
We maintain our BUY call on Bumitama following its consensusbeating FY13 earnings. Based on our revised forecast, the stock is trading at 10.9x and 9.0x forward earnings, which is undemanding compared with its production growth of 16.5% and a rising CPO price environment. We believe cheap stocks such as this will become a thing of the past once money starts to flow into the sector more significantly.
- Ahead of expectations. Bumitama's core FY13 earnings beat our forecast by 18% and consensus by 24%. This was despite production growth falling slightly short of our target of 19%. The 36.6% q-o-q surge in production, coupled with 12.9% higher CPO price, contributed to the strong 4Q performance, which exceeded our estimate. Note that by the end of 9M, Bumitama only met 68% of our full year forecast.
- Production. Bumitama's FY13 nucleus fresh fruit bunches (FFB)production came in at 1.105m tonnes, representing a growth of 16.6% yo-y. We had expected production of 1.128m tonnes, which was a trimmed down target. Despite the weaker than expected FY13 production, we are keeping our FY14 production expectation at 1.287m tonnes, which represents a growth of 16.5% vs management's guidance of 25%.
- New planting target. During the year, the company added 13,770 ha of nucleus planted areas, bringing its total nucleus areas to 114,952 ha, of which 10,543 ha comprised new planting and the balance was acquired in April. For 2014, the company is targeting to plant on 8,000 ha.
- Raising forecasts. Given the lower than expected interest expenses, we raise our FY14 forecast by 2.7% to IDR1,443bn to factor in a lower effective interest rate. Our FY15 forecast is raised by a similar quantum to IDR1,742bn. This lifts our FV, based on 16x FY14 earnings, to SGD1.39 compared with SGD1.35 previously. Based on our revised forecast, Bumitama is trading at very alluring valuations of 10.9x FY14 and 9.0x FY15 earnings. Maintain BUY.
Financial Exhibits
SWOT Analysis
Company Profile
Bumitama Agri (BAL) is a high-growth oil palm plantation company with all its plantations in Indonesia. It has 149,683 ha of total planted area. This group, listed on the Singapore Exchange on 12 April 2012, started initial planting in 2004 with 5,023 ha of nucleus area and has to date planted a total of 114,952 ha of nucleus area across Sumatra and West and East Kalimantan. The company was started and controlled by the Hariyanto family, who currently still holds a 50.9% stake.
Bumitama Agri (BAL) is a high-growth oil palm plantation company with all its plantations in Indonesia. It has 149,683 ha of total planted area. This group, listed on the Singapore Exchange on 12 April 2012, started initial planting in 2004 with 5,023 ha of nucleus area and has to date planted a total of 114,952 ha of nucleus area across Sumatra and West and East Kalimantan. The company was started and controlled by the Hariyanto family, who currently still holds a 50.9% stake.
Recommendation Chart
Source: OSK-DMG
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