The Singapore research team at RHB Group Research is keeping its “buy” call and target price of 80 cents on Bumitama Agri (BAL) after its results for the 9MFY2022 ended Sept 30 stood in line with its expectations and significantly above the street’s estimates.
In its results presentation on Nov 14, BAL’s profitability level for the nine-month period was said to be at a decade-long high despite rising cost pressures and the normalising trend in commodity prices.
In the 9MFY2022, BAL’s net profit surged by 164% y-o-y to IDR2.83 trillion ($248.67 million). Revenue for the same period increased by 48% y-o-y to IDR12.56 trillion while gross profit stood 133% higher y-o-y at IDR5.05 trillion.
Ebitda for the 9MFY2022 increased by 127% y-o-y to IDR5.03 trillion while ebitda margin increased 14 percentage points y-o-y to 40.1%.
According to BAL, its normalising crude palm oil (CPO) prices in the 3QFY2022 were supposed by “ample sales volume growth”.
BAL’s fresh fruit bunches (FFB) output reached 1.43 million tonnes in the 3QFY2022, up by 26% y-o-y.
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In the 9MFY2022, BAL’s FFB grew by 13.8% y-o-y, which is largely in line with the team’s estimates.
“Management continues to expect 1H:2H output to be in the 50%:50% range. We keep our FY2022 and FY2023-FY2024 FFB growth assumptions at 14% and 5%-6%,” the team writes in its Nov 15 report.
Despite the higher financials, however, the team has lowered its forecast for the FY2022 to FY2024 by 2%-3%. “This is after imputing the latest taxes and duties applicable in Indonesia, as well as our latest in-house foreign exchange (forex) assumptions,” the team explains.
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On its unchanged target price, the team adds that it has already taken into account an environmental, social and governance (ESG) discount of 8%, given its in-house ESG score of 2.6.
“The stock is now trading at 5.4x FY2023, even below -1 standard deviation (s.d.) from its five-year mean. We believe this is unwarranted,” the team writes. “Assuming the dividend payout is at the maximum 40%, FY2022’s dividend yield is also attractive, at [around] 13%.”
As at 4.19pm, shares in BAL are trading 0.5 cent lower or 0.78% down at 63.5 cents.
