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SINGAPORE (May 13): Stronger crude palm oil (CPO) prices and lower unit costs have enabled Bumitama Agri’s 1Q FY20 results to exceed analyst expectations.

The company’s earnings of IDR262.07 billion ($25 million) beat RHB Securities’ 1Q forecast, comprising 35% of the brokerage’s FY20 forecast.

It also beat Maybank Kim Eng’s 1Q earnings forecast, comprising 29% of the brokerage’s FY20 forecast.

Nevertheless, the outperformance has led analysts to have mixed projections for the company ahead.

RHB has raised its FY20F-21 earnings forecasts by 5-14% on the back of lower FFB growth and unit costs.

The brokerage has lowered its FY20 FFB growth assumptions to 4% from 8%, though it retained its 8%-9% growth assumptions for FY21-22.

Maybank KE, however, has maintained its earnings forecasts.

This is because the brokerage anticipates weaker 2Q and 3Q results on low CPO price, ahead of better earnings in 4Q when output typically peaks.

RHB has raised its target price to 43 cents from 38 cents previously, but kept its “neutral” recommendation for the stock.

“We believe valuations are fair, as the stock is currently trading in line with historical averages,” RHB writes in a note dated May 13.

Maybank KE, however, maintained its target price of 78 cents, with an unchanged “buy” rating.

“[The stock] currently trades at less than 10 times forward [earnings] for a strong two-year earnings [compounded annual growth rate] potential of 47% and about US$6,700 per planted hectare, below new replacement costs,” Maybank KE analyst Ong Chee Ting writes in a note dated May 12.

As at 3.29 pm, Bumitama was flat at 43.5 cents, with 481,100 shares changed hands.