• Bumitama Agri Ltd (BAL) (UNRATED) has released its 1HFY24 results. The group’s net profit retraced by 27.9% YoY to Rp856.8bil in 1HFY24 as internal FFB production fell by 11% and cost of purchasing FFB from external parties increased. On an annualised basis, BAL’s core net profit was 14% below consensus estimates of Rp2.1 trillion.

• BAL reckons that its FFB production would decline by 5% in FY24E due to lagged effects of 2023’s dry weather. FFB production in 2H2024 is expected to be 30% stronger than 1H. Peak production is anticipated to take place in 4QFY24. Previously, BAL was expecting a FFB growth of 3%-5% in FY24E.

• BAL recorded a cash cost of production of Rp5,900/kg (RM1,755/tonne) in 1HFY24, which was 10% higher YoY. The increase in the unit cash of production in 1HFY24 was attributed to lower volume of CPO production. BAL’s cash cost of production was Rp4,700/kg (RM1,378/tonne) in 2QFY24 vs. Rp7,100/kg (RM2,141/tonne) in 1QFY24.

• BAL’s cash cost of production is expected to increase by 6%-9% in FY24E from Rp4,900/kg (RM1,468/tonne) in FY23. BAL’s fertiliser application is on track. The group applied 50% of its full year fertiliser programme in 1HFY24.

• BAL is envisaged to replant 1,500ha of ageing oil palm trees in FY24E (FY23: 892ha). The group replanted 700ha in 1HFY24.

• BAL is presently trading at a consensus FY25F PE of 11.3x, which is higher than its 5-year average of 8x.

Source: AmInvest Research - 15 Aug 2024