- Bumitama Agri Ltd’s (UNRATED) (BAL) net profit fell by 41.0% YoY to Rp181.6bil in 1QFY15 as revenue contracted by 1.7%. BAL’s annualised results were below consensus estimates.

- Unlike a large Indonesian plantation company, BAL said that its CPO price realised has not been affected by the palm oil export levy, which would be implemented in Indonesia at the end of the month.

- The group’s CPO price realised is still close to PT Astra Agro’s auction prices. BAL is also seeking clarification from the government on the implementation of the export levy. Recall that an industry player said that CPO prices in Indonesia started declining by USD30/tonne in reflection of the export levy, a month ago.

- BAL’s production cost was Rp3,896/kg (RM1,102/tonne) in 1QFY15 against Rp3,607/kg (RM1,005/tonne) in 1QFY14. The increase in production cost was mainly due to a 14% YoY rise in wages and 11% YoY climb in fertiliser costs in 1QFY15.

- BAL’s FY15F production cost is envisaged to be the same as FY14’s Rp3,607/kg (RM995/tonne) as FFB production improves in the coming financial quarters. Fertiliser price was flat YoY in 1QFY15. However, the volume of fertiliser applied rose in 1QFY15 as there was a delay in the arrival of the fertiliser at the estates in 1QFY14.

- BAL’s share of losses in the associate, which is managed by IOI Corporation, widened from Rp1.3bil in 1QFY14 to Rp43bil in 1QFY15 due to forex changes and interest on the USD borrowings. We understand that the associate’s performance should improve going forward as IOI has completed the construction of the palm oil mill.

- BAL’s new plantings were 736ha in 1QFY15. Out of these, about 472ha were in respect of the nucleus estates. New planting target is 4,000ha for FY15F.

- BAL’s FFB yield declined by 2.4% YoY to 4.1 tonnes/ha in 1QFY15 as production pattern normalised after last year’s unusually high FFB yield and production. The group expects 1H to account for 40% to 45% of full year’s FFB output.

- BAL forecasts its FFB production to grow by 20% in FY15F. The group’s nucleus FFB output rose by 10.7% YoY in 1QFY15.

Source: AmeSecurities Research - 13 May 2015