SINGAPORE (Nov 14): Maybank Kim Eng is keeping Bumitama Agri at “buy” with an unchanged 95 cents target price, given 3Q17 results came within its estimates.
However, 4Q17 earnings could still be stronger q-o-q as 92% of this year’s fertilising activities have been completed in 9M17.
To recap, Bumitama Agri reported 3Q17 core PATMI of IDR271 billion ($27.2 million), bringing 9M17 core PATMI to IDR826 billion, which met 70% of its full-year estimates.
3Q17’s y-o-y earnings jump was underpinned by higher revenue which was in turn boosted by strong FFB (Fresh Fruit Brunches) output growth recovery post-El Nino.
Meanwhile, CPO ASP achieved was marginally 1% lower at IDR7,778/kg from a year ago.
In a Tuesday note, analyst Ong Chee Ting says FFB output growth was good in 3Q17 but in part due to the low base last year and hence unlikely to be sustainable in 4Q17.
9M17 output met 74% of full-year forecast and is on track to meet Maybank’s full-year growth forecast of 22% y-o-y, says Ong.
“We continue to like Bumitama Agri for its medium-term growth story, anticipating a 13% CAGR in its 2016-2019 FFB output. This is underpinned by its young tree profile of 8.7 years average,” adds the analyst.
Shares in Bumitama Agri are up 1 cent at 84 cents or 9.8 times FY18 forecast earnings.
