Bumitama Agri - RHB Invest 2024-08-15: Expecting a Better 2H24; Still NEUTRAL

• Bumitama Agri (SGX:P8Z)’s 2Q24 results met our expectations but slightly missed the Street estimate. The stock is trading at 8.3x FY25F P/E, i.e. within its peer range of 6-11x P/E, while its handsome FY25F dividend yield of ~6% continues to provide strong support for Bumitama Agri's share price.
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2Q24 core profit surged 41% q-o-q

• Bumitama Agri's 2Q24 core profit surged 41% q-o-q but dropped 31% y-o-y, bringing 1H24 core profit IDR921bn (-9.2% y-o-y). This is largely in line with our forecast (at 52% of FY24 estimate), but missed the Street estimates (at 44% of the full-year estimate).
• The drop in 2Q24 profit was mainly due to lower-than-expected FFB output but cushioned by the increase in CPO and PK ASPs (+4.4% and +21.5% y-o-y).
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2Q24 nucleus FFB production ticked up by 1.2% q-o-q

• 2Q24 nucleus FFB production ticked up by 1.2% q-o-q but plunged by 25.7% y-o-y, taking 1H24 FFB nucleus output growth to 16.2% y-o-y. This is lower than our 2.5% growth assumption and management’s initial guidance of 3-5% y-o-y for FY24.
• Weather conditions are not a main concern at this juncture, and Bumitama Agri expects its output to pick up in 4Q24. However, management has trimmed its internal output (FFB nucleus + plasma) growth forecast to around -5% y-o-y, as a result of the lower-than-expected decrease.
• We also pare down our FY24F FFB nucleus output growth to -7.1% y-o-y (from +2.5% y-o-y), and to +0.1 and +0.9% (from +4 and +5%) for FY25-26F.
• We also decrease our y-o-y FFB plasma growth assumptions for FY24-26 to +0.5%, +5.4% and -3.1% from +10%, 8% and 0%, to be in line with its guidance.

CPO ASP strengthened q-o-q in 2Q24.

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Singapore Research RHB Securities Research | https://www.rhbgroup.com/ 2024-08-15 SGinvestors.io

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