- BUY Entry – 0.83 Target – 0.88 Stop Loss – 0.80
- Bumitama Agri Ltd is an Indonesia-based producer of crude palm oil and palm kernel with oil palm plantations and mills located in three provinces of Indonesia, namely Central Kalimantan, West Kalimantan and Riau. Its primary business activities are cultivating and harvesting oil palm trees, processing fresh palm fruit bunches from its oil palm plantations, plasma plantations and third parties into crude palm oil and palm kernel, and selling crude palm oil and palm kernel.
- Outstanding FY21 financials. Revenue rose 34.6% to IDR 12,248,630mn in FY21 while gross profit rose 36.8% to IDR 3,456,655mn. Gross profit margin improved marginally by 0.4ppts to 28.2% in FY21, compared to 27.8% in FY20. Overall bottom-line grew 53.4% to IDR 2,089,377mn in FY21.
- Russian-Ukraine war a push to commodity prices. Against an already turbulent backdrop of global inflationary pressures amid rising food and energy prices and disrupted supply chains following the coronavirus pandemic, the war between Russia and Ukraine is exacerbating supply and demand tensions, damaging consumer sentiment and is threatening global economic growth. Palm oil prices spiked to slightly above $8000 in the beginning of March 2022 and even though prices have corrected, they remain well above 2021 levels.
- Recent catalyst of palm oil prices. Cargill Inc., one of the world’s biggest agricultural traders, stopped buying palm oil products from Sime Darby Plantation Bhd. after the U.S. said it found indicators of forced labour in the Malaysian grower.
- Cargill has suspended all new sourcing of palm oil and derivative products from Sime Darby since Feb. 25, the world’s biggest oil palm planter by acreage said in an emailed response to questions. Positive consensus estimates. Bumitama Agri currently has a positive consensus estimate of 4 BUYS, 0 HOLD and 0 SELL, with a 12M TP of S$0.93.
Generic 1st Crude Palm Oil (K01 Comdty)
Bumitama Agri Ltd (BAL SP) (Source: Bloomberg)