Introduction
This in‐depth equity research report provides a comprehensive overview and analysis of Bumitama Agri Ltd (BUMI.SI) – a leading upstream producer of crude palm oil (CPO) and palm kernel (PK) in Indonesia – as well as a detailed peer comparison of other major players in the sector. The report covers production, financial performance, dividend policies, valuation metrics and risk factors. Designed for the informed online financial audience, the article delves into every detail from Q4 and full-year results, forecasts, peer valuation analysis and the sustainability progress of the companies.
Company Focus: Bumitama Agri Ltd (BUMI.SI)
Corporate Overview and Business Model
Bumitama Agri Ltd, founded by the Harita Group in 1996 and listed on the Singapore Exchange since 2012, is a key player in Indonesia’s palm oil industry. As one of the foremost upstream producers, the company operates oil palm plantations across Central and West Kalimantan and Riau, with an aggregate planted area of approximately 187,628 hectares. Its integrated operations cover cultivation, harvesting, and processing of fresh palm fruit bunches (FFB) into CPO and PK, making it well positioned to achieve higher-than-industry-average yields from its high-quality, 14-year-old average plantations.
Investment Thesis and Key Drivers
Bumitama Agri Ltd’s strong market position is driven by its superior productivity, premium quality plantations and sound management focus on maximising existing assets during a period where industry fundamentals remain supportive. Constrained supply coupled with rising demand for palm oil creates price resilience for CPO. The market increasingly views Bumitama as a dividend yield play with Refinitiv consensus forecasting a 12‐month forward dividend yield of 5.6%.
- Strong finish to FY24 with revenue and profit before tax margins (PATMI) beating expectations.
- 4Q24 saw revenue growth of 30% QoQ and 42% YoY to IDR5.2 trillion, driven by both CPO and PK segments.
- Price dynamics were supportive, with CPO ASP rising 9% QoQ (27% YoY) and PK ASP up 20% QoQ (81% YoY).
Financial Performance and Production Insights
During Q4, production and sales volumes registered significant increases (28% and 22% QoQ respectively) accompanied by notable improvements in the EBITDA margin, which expanded by 3.8 percentage points QoQ to 30.5%. EBITDA surged by 48% QoQ (65% YoY) reaching IDR1.6 trillion, despite an adverse full-year production impact due to challenging weather conditions and a replanting exercise. Over the full year FY24, despite a decline in production volumes from poor weather and reliance on external FFB sources, revenue grew by 8% to IDR16.7 trillion. However, EBITDA and net profit declined by 4% and 7% respectively, compressing the EBITDA margin to 26.4%.
- FFB harvest stood at 5.2 million tons with a yield of 18.6 tons per hectare.
- Internal FFB production declined by 10%, partially offset by a 9% increase from external sources.
- Interest expenses rose by 37% on a full-year basis due to a post-refinancing cost of debt increase.
Dividend Policy and Outlook for FY25
Management has revised its dividend policy from a maximum payout ratio of 40% to a range of 40–60%, supported by robust cash flows. Although the quantum for the final dividend is yet to be announced, there are expectations for an upside surprise. For FY25, the outlook calls for a production recovery, elevated yet depreciating crude palm oil (CPO) prices and an anticipated increase in unit cost pressures from rising fertiliser and labour costs.
Valuation and Price Target
The report reiterates a BUY rating on Bumitama Agri Ltd. with an updated fair value estimate of SGD0.965, up from the previous SGD0.915 target. This positive outlook is underpinned by the company’s revenue performance, resilient CPO pricing amid a supply deficit – further exacerbated by the Indonesian government’s B40 mandate – and its dividend yield attractiveness.
Environmental, Social and Governance (ESG) Initiatives
Bumitama Agri Ltd has been making steady progress on its sustainability agenda. The company is on track to achieve a 30% reduction in greenhouse gas (GHG) emissions intensity by 2030 (from a 2016 baseline). In addition, it plans to invest in two biogas treatment facilities annually from 2024 onwards, and aims to secure full Roundtable on Sustainable Palm Oil (RSPO) certification for all its units and mills by 2025. Its community development initiatives include the Social Forestry scheme, designed to empower local communities without encroaching ecologically sensitive land, as well as the establishment of 41 schools impacting nearly 6,000 local students.
Potential Catalysts and Investment Risks
Potential Catalysts:
• Improved weather conditions potentially leading to higher production volumes.
• Supportive domestic policies by the Indonesian government.
• Accretive acquisitions that could further strengthen market position.
Investment Risks:
• Unfavourable fluctuations in CPO prices.
• Rising production costs due to higher fertiliser and labour expenses, which may pressure margins.
• Execution risks related to cost overruns.
• Regulatory challenges impacting the palm oil industry.
Peer Company Analysis
First Resources Ltd (FRLD.SI)
First Resources Ltd is one of the companies benchmarked against Bumitama Agri Ltd, featuring the following key valuation metrics for FY25E and FY26E as per the report:
- Price/Earnings: 8.4 (FY25E) and 8.2 (FY26E)
- Price/Book: 0.5 (FY25E) and 1.1 (FY26E)
- EV/EBITDA: 5.2 (FY25E) and 5.0 (FY26E)
- Dividend Yield: 5.8% (FY25E) and 6.5% (FY26E)
- ROE: 14.7% (FY25E) and 13.9% (FY26E)
The company is positioned as a viable peer with a steady dividend yield, though nuances in its valuation metrics relative to the others in the sector suggest a different risk-return profile.
Golden Agri-Resources Ltd (GAGR.SI)
Golden Agri-Resources Ltd is another key comparator in this sector. The valuation metrics reported are as follows:
- Price/Earnings: 9.0 for both FY25E and FY26E
- Price/Book: 0.4 for both FY25E and FY26E
- EV/EBITDA: 3.1 (FY25E) and 2.9 (FY26E)
- Dividend Yield: Not applicable as per the current analysis
- ROE: 19.6% (FY25E) and 19.9% (FY26E)
This peer’s lower EV/EBITDA multiple and strong ROE indicate robust operational efficiency despite a steady Price/Earnings and Price/Book valuation.
Wilmar International Ltd (WLIL.SI)
Wilmar International Ltd completes the peer comparison with the following set of metrics:
- Price/Earnings: 9.9 (FY25E) and 8.9 (FY26E)
- Price/Book: 0.7 for both FY25E and FY26E
- EV/EBITDA: 9.9 (FY25E) and 9.0 (FY26E)
- Dividend Yield: 5.5% (FY25E) and 6.0% (FY26E)
- ROE: 7.2% (FY25E) and 7.7% (FY26E)
Wilmar’s relatively higher EV/EBITDA multiple combined with a lower ROE suggests that while it offers a stable dividend yield, its operational leverage and profitability margins differ notably from its peers.
Financial Statements and Performance Highlights
The report further provides detailed financial statements covering a five-year historical period. Key highlights include:
- Revenue Growth: From IDR7.69 trillion in FY2019 to IDR15.44 trillion in FY2023 with steady growth observed until FY24 when revenue reached IDR16.73 trillion.
- Gross and Operating Profit: Gross profit expanded significantly over the period, despite higher operating expenses in later years. Operating income peaked in FY2022 at IDR4.83 trillion before moderating in FY2023.
- Profitability Ratios: Return on Common Equity, Assets and invested capital, along with operating margins, demonstrated upward trends until the challenging conditions in FY24 contributed to margin compressions.
- Credit Strength: A marked improvement in debt ratios is evident over the years with Total Debt/EBIT reducing from 6.30 in FY2019 to below 1 in recent periods. The net debt/equity ratio similarly improved from 0.94 to 0.33 in FY2023.
- Earnings Per Share (EPS): EPS has followed an upward trend with basic EPS of 392.4 cents in FY2019, increasing substantially to 1,618.0 cents in FY2022 before settling at 1,412.0 cents in FY2023.
Conclusion
The equity research report underlines Bumitama Agri Ltd’s solid operational performance, underpinned by strong Q4 results, resilient CPO pricing amid supply deficits and a clear mandate to ramp up dividend payouts. The company’s forward-focused strategy – including investment in sustainability and continuous productivity enhancement – positions it favorably against its peers. Additionally, the comprehensive peer analysis involving First Resources Ltd, Golden Agri-Resources Ltd, and Wilmar International Ltd provides investors a complete view of the sector’s competitive landscape. With an attractive BUY recommendation and an updated fair value target of SGD0.965, Bumitama Agri Ltd is earmarked for potential upside, subject to mitigation of operational and regulatory risks.
