Maybank Securities analyst Ong Chee Ting has kept “buy” on Bumitama Agri P8Z with a target price of 84 cents, highlighting the company's above-expectations FY2022 ended December dividends per share (DPS).
In his Apr 6 report, Ong highlights that Bumitama Agri has announced a final plus special FY2022 DPS of 6.55 cents, bringing the year’s total DPS to 7.8 cents — 22% ahead of Maybank's expectations.
“Ahead of its upcoming AGM, Bumitama Agri announced a final DPS of 4.42 cents plus a special DPS of 2.13 cents to reward shareholders following its record FY2022 core PATMI of IDR3.183 trillion. Coupled with an interim DPS of 1.25 cents paid in September 2022, this brings the total FY2022 DPS to 7.8 cents,” he elaborates.
The final plus special DPS are subject to the approval of shareholders at the upcoming AGM on Apr 20. Ong notes that the dividends are expected to go ex-date on Apr 26 and made payable on May 12.
Bumitama Agri’s FY2022 dividend payout ratio (DPR) is estimated to be at 55% of headline PATMI or 49% of Maybank’s core PATMI forecast — higher than its dividend policy — to distribute up to 40% of its distributable income, Ong points out.
Maybank is keeping its 40% DPR assumptions as it deems the special DPS to be one-off — proposed as a way to celebrate Bumitama Agri’s 25th anniversary as well as to commemorate its 10 years of being listed on the Singapore Exchange.
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“Still, at our 40% DPR, Bumitama Agri continues to offer attractive dividend yields of more than 6%,” adds Ong.
Moving forward, Maybank expects Bumitama Agri to report weaker earnings y-o-y in FY2023, given a more normalised crude palm oil environment. Ong notes that Bumitama Agri is targeting 3% to 7% fresh fruit bunches growth for FY2023, following the higher base of FY2022.
Meanwhile, on the cropping pattern front, Bumitama Agri expects FY2023’s 1HFY2023 and 2HFY2023 output ratio at 45%-48%:52%-55%. This suggests a better quarterly earnings trend in the second half of the year.
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“1HFY2023 earnings may be burdened by the relatively high fertiliser cost locked-in towards end-2HFY2022, while the present lower fertiliser spot prices may only benefit Bumitama Agri in 2HFY2023,” says Ong.
As at 2.07pm, shares in Bumitama Agri are trading 0.5 cents lower or 0.78% down at 63.5 cents.
