Bumitama Agri (BAL)

For the FY2020, earnings surged 64.1% to IDR1.13 trillion, from IDR686.31 million a year ago.

While plantation stocks are typically strongly correlated with CPO, only Wilmar International’s share price has a meaningful gain.

Gross profit margin was up 18.2 percentage points y-o-y to 25.3%.

Earnings are likely to be stronger y-o-y in 2020 and 2021 assuming a higher CPO price of MYR2500/tonne.

The reduction of Malaysia’s export duty on crude palm oil (CPO) to zero in June from 4.5% in May has a contrasting impact on several Singapore-listed and Indonesia-based palm oil companies.

Wilmar leads the pack following a good 1Q20 start for palm oil, but Golden Agri Resources falls back into the red.

The way Maybank Kim Eng analyst Ong Chee Ting sees it, BAL remains a “buy” with an unchanged target price of 78 cents for its “medium-term prospect with its relatively younger trees of an average age of 10.6 years old”.

Although cheap prices might be enough to lure investors in, Simadiputra advises investors to focus on quality stocks with solid fundamentals such as Bumitama Agri, Wilmar or First Resources.

Here are four stocks to watch for the week: Dairy Farm International, Bumitama Agri, Golden Agri Resources and Jumbo Group

Golden Agri-Resources (GAR) and Bumitama Agri (BAL) are getting their forecasts slashed on the back of lower crude palm oil (CPO) price assumptions.