Bumitama Agri -
Share price: SGD0.990
Target price: SGD1.14 (from SGD1.24)
Hurt by Low 3Q13 FFB Production
Below expectations. 3Q13 PATMI of IDR168.8b (+9% QoQ, -5% YoY) brought 9M13 to IDR475b (-15% YoY); 56% and 60% of our and street estimates respectively. We cut our 2013 PATMI forecast by 22% largely on lower FFB output growth and weaker CPO ASP. Conversely, we raise our 2014-15 PATMI by 5% largely on higher translated CPO ASP of MYR2,600/t in IDR terms, factoring in weaker IDR against MYR exchange rate of 3,300 (previously 3,154; +5%).
Maintain BUY on BAL with lower TP of SGD1.14 (previously SGD1.24) on unchanged 16x FY14 PER as higher 2014 (IDR) PATMI is insufficient to offset a strengthened SGD against IDR (+12%). Weak output in 3Q13. The weak 3Q13 was dragged down by (i) lower-than-expected FFB production of 257k (+3% QoQ, +4% YoY) which could be due to industry-wide biological tree stress phenomenon, and (ii) still low CPO ASP of IDR7,175/kg (+6% QoQ, -3% YoY). All-in cost of production for 3Q13 is estimated at IDR2,911/kg (+11% QoQ, +9% YoY).
Anticipate stronger 4Q13 results. This is underpinned by stronger 4Q13 output on delayed peak production quarter for 2013, and recent surge in CPO ASP to above IDR8,000/kg. That said, 2013’s FFB output is likely to fall short of our forecast of 1.135m MT (+20% YoY) as 9M13’s output has only met 66% of our 2013 forecast. Hence, we cut our 2013 forecast by 7% to 1.056 MT (+11% YoY). We leave our 2014-15 production forecasts unchanged pending management guidance.
2013 earnings forecast cut by 22%. Besides trimming our production forecasts, we also cut our 2013 CPO ASP forecast by 5% to MYR2,380/t (previously MYR2,500/t), while leaving our 2014-15 CPO ASP assumptions unchanged at MYR2,600/t.
Publish date: 14/11/13