Dismal FFB output plagues Bumitama Agri

SINGAPORE (July 27): RHB has downgraded Bumitama Agri from a buy recommendation to a hold recommendation, after the palm oil grower posted a steep decline in production output of fresh fruit bunches (FFB) for 2Q2016.

According to the production highlights released by Bumitama Agri on July 21, FFB production fell 24.6% to 589,756 MT, with FFB nucleus production falling 26.3%. Crude palm oil and palm kernel output had also fallen 24.9% and 26.5% respectively.

RHB’s Singapore research team noted that Bumitama’s FFB nucleus output for the half-year period had thus declined 17.3%, which was significantly lower than the brokerage’s projected 4.5% growth for FY2016.

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