Bumitama Agri - RHB Invest 2024-11-13: Decent 3Q24 Net Profit Despite Output Drag; BUY

• We expect Bumitama Agri’s earnings to increase in 4Q on improving productivity towards the year end and higher ASPs.
• Keep BUY and S$0.95 Bumitama Agri's target price, 13% upside. Valuation remains attractive – Bumitama Agri's share price is trading at 7.8x FY25F P/E, i.e. the low end of its peers’ range of 7-11x. Meanwhile, the FY24F dividend yield of 6% is an added advantage.

3Q24 results are in line with our expectations, but below Street’s.

• - Read this at SGinvestors.io -
• Bumitama Agri recorded nucleus FFB growth of 5% q-o-q in 3Q24 (-29% y-o-y), bringing 9M24 numbers to an FFB decline of 21% y-o-y, likely due to the lagged negative effect from extreme weather conditions.
• FFB plasma saw a flattish growth at 0.8% q-o-q, bringing 9M24 FFB internal output to -16% y-o-y. This is below our FY24 assumption of -7.1% and management’s internal output guidance of -5% y-o-y. Bumitama Agri expects 4Q24 to see a marked recovery in output, peaking in December, as October output has already seen a rise of >20% m-o-m.
• While It continues to expect 2H24 to contribute 55-57% of FY24’s output, it is reducing its full-year output guidance to a high single-digit decline. As such, we also reduce our FFB growth assumption to -9% y-o-y while projecting FY25-26 growth at 5-6% y-o-y.

CPO ASP strengthened in 3Q24.

• Read more at SGinvestors.io.

Singapore Research RHB Securities Research | https://www.rhbgroup.com/ 2024-11-13 SGinvestors.io

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