Bumitama Agri

Bumitama Agri: UOB Kay Hian initiates coverage with Buy Call and $1.10 TP. House note that young age profile and best OER to support earnings growth. Like Bumitama Agri for its young age profile and best oil extraction rate (OER) to support its 5-year earnings CAGR of 33%. FFB production is likely to double in three years and house expect its fresh fruit bunch (FFB) production to grow at a 3-year CAGR of 24%. This places BAL among the top two companies under coverage in terms of production growth, after Kencana Agri’s 24.4%. The strong production growth is supported by: a) a 15-20% increase in mature areas every year, b) large young areas (35% of total planted area), and c) progressive new plantings of 13,000ha per year would continue to ensure strong production growth.