<Result Analysis> Exceeding our expectations
- 3Q23 net profit reached Rp873bn (+33.4% y-o-y, +15% q-o-q) , above our estimate, driven by strong sales volume despite lower CPO selling price q-o-q
- We forecast BAL to finish strong in 2023 as Indonesia domestic selling price improves to Rp11,000/kg in November
- Maintain BUY with TP of S$0.90
- Bumitama (BAL) 3Q23 earnings reached Rp873bn (+33.4% y-o-y, +15% q-o-q) exceeding our estimate. Strong 3Q23 earnings sent 9M23 earnings to Rp2tr (-27.2% y -o-y), exceeding our FY23F earnings of Rp1.6tr (-43.3% y-o-y). The combination of good CPO selling price and strong CPO sales volume boosted overall earnings in 3Q23.
- Top line reached Rp4.3tr (+20% y-o-y, +10.4% q-o-q) driven by strong CPO sales volumes. CPO and Palm Kernel (PK) sales volume reached 361k MT (+16.3% y-o-y, +19.3% q-o-q) and 77.6k MT (+14.1% y-o-y, +30.6% q-o-q) respectively , followed by CPO and PK selling price of Rp10,800/kg (+3.8% y-o-y, -8.5% q-o-q) and Rp5,000/kg (-2.0% y-o-y, -12.3% q-o-q).
- Fresh fruit bunches (FFB) expanded to 6MT/ha (+13.2% y-o-y, +3.4% q-o-q) in 3Q23. BAL booked higher than expected yield performance due to supportive weather and maturing young trees. Nucleus FFB production reached 743k MT (+3% y-o-y, +9.5% q-o-q) , followed by smallholder and external 323.6k MT (-0.9% y-o-y, +9.3% q-o-q) and 460k MT (+19.3% y-o-y, +10.3% q-o-q) respectively.
- BAL set to finish strong in 4Q23. BAL is set to finish strong in 4Q23 from the higher Indonesia domestic CPO price trend and good sales volume. Furthermore, it is currently trading at FY24 PE of 5.6x, which is undemanding for its strong production and earnings performance. We maintain BUY rating with DCF based TP of S$0.9.
Quarterly operational and financial data
Source : Company, DBS Bank