Bumitama Agri - Raised Earnings On Higher CPO Price Assumptions
- Bumitama Agri (SGX:P8Z)’s (BAL) 3Q21 earnings has shown that the company is one of the best proxies of rising CPO prices. We believe the strong earnings trend will continue in 2022. As we raised our CPO price forecast to US$700 per MT for 2022 and 2023, Bumitama Agri’s corresponding earnings are 32% and 33% higher at Rp1.48tr (+2.4% y-o-y) and Rp1.54tr (+3.9% y-o-y).
- We believe Bumitama Agri will keep its operations efficient, coupled with CPO yield per hectare and output expansion potential next year. Fertilising cost is expected to rise alongside gas prices in 2022.
- Bumitama Agri's share price is trading at 7.3x FY22F price-to-earnings (PE), well below its 5-year average P/E multiple of 11.4x. Meanwhile, Bumitama Agri’s estates will be at the prime age production cycle in the next decade.
Above is the excerpt from report by DBS Group Research.
Clients of DBS may access the full report in PDF @ https://www.dbs.com/insightsdirect/.
William Simadiputra DBS Group Research | Singapore Research Team DBS Research | https://www.dbsvickers.com/ 2021-12-07 2021-12-07
Previous report by DBS Research:
2020-11-10 Bumitama Agri - Earnings Rebound Not Priced In
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