SINGAPORE (Feb 27): Maybank Kim Eng is maintaining its “buy” on Bumitama Agri with 96 cents target price on its FY16 results beat and expectations of a rebound.
For 2017, Maybank expects Bumitama Agri’s young trees to drive strong output growth trajectory of 22% y-o-y.
“We consider Bumitama Agri’s 2017 FFB (Fresh Fruit Bunches) growth guidance of 15% y-o-y to be low considering expectation of a post El Nino rebound, and its young tree profile of 8.7 years average and +11% of new nucleus area coming into maturity in 2017,” says analyst Ong Chee Ting in a Monday report.
To recap, Bumitama Agri’s strong 2016 headline PATMI of IDR1,005 billion ($106 million) was lifted by fair value gain on biological assets of IDR27 billion, net FX translation gains of IDR16 billion and deferred tax income of IDR55 billion. Excluding these, 2016 core PATMI of IDR919 million met 134% of Maybank’s forecasts.
Operationally, 2016 FFB yield fell 18% y-o-y to 14.6 tonne/ha due to the lagged effect of the strong El Nino in 2015. But FFB nucleus output only fell 4% y-o-y to 1,513,422 MT as more areas came into maturity. The lower output was offset by higher CPO average selling price achieved at IDR7,378/kg or 6% higher y-o-y despite lower yields.
As at 3.22pm, shares of Bumitama Agri closed 1 cent higher at 80 cents.