Bumitama Agri - OCBC Investment 2023-11-14: Waiting To Get Out Of The Woods

• Bumitama Agri (SGX:P8Z)’s key performance metrics continued to improve q-o-q in 3Q23, with revenue/EBITDA/net profit growing by 10%/18%/15% q-o-q or 20%/29%/33% y-o-y to IDR4.3t/IDR1.6t/IDR874b respectively. This was largely driven by a 10% and 16% y-o-y increase in CPO production and sales volumes, respectively, while fertiliser costs continued to decline.

Sequential quarterly improvement in profitability

• - Read this at SGinvestors.io -
• Consequently, 9M23 revenue/EBITDA/ net profit was down 6%/27%/27% y-o-y to IDR11.8t/ IDR3.7t/IDR2.1t respectively, with the declines narrowing vis-à-vis 1H23.

Productivity remains key competitive advantage to ride on bullish industry outlook

• - Read this at SGinvestors.io -
• Unsurprisingly, CPO prices remain soft. According to the Malaysian Palm Oil Board, the average monthly price of locally delivered CPO in Malaysia continued its downtrend, retracing 2.3% month-on-month to MYR3,640 per tonne in Oct 2023.
• Bumitama Agri’s average selling price (ASP) for CPO was down 12% y-o-y to IDR11,400 per kg on a 9M basis. However, 3Q23 marked the first y-o-y increase in ASP by 4% to IDR10,800 per kg, despite being down 8% q-o-q.
• Notwithstanding the short-term ASP weakness, Bumitama Agri's management shared that the industry remains bullish on the mid-to long-term outlook. Lower palm oil yields, as well as an expected slowdown in global production growth of sunflower and rapeseed oil, are expected to lend some support and resilience to CPO prices.

Increase Fair Value estimate to S$0.73

• Read more at SGinvestors.io.

Ada Lim OCBC Investment Research | https://www.iocbc.com/ 2023-11-14 SGinvestors.io

---