Bumitama Agri

Bumitama Agri (BAL): UOB Kay Hian maintains Buy with $1.12 TP. House note that grphas stopped all land clearing and planting activities on about 6,350ha with regard to petitions by NGOs due to the presence of orang-utans in the estates. Expect marginal impact on BAL but this would result in more cautious land clearing activities in future. House adjust earnings forecasts for 2013 down by 12% to factor in lower CPO ASP, but have made no change to 2014 and 2015 forecasts. Overall, like BAL for its young age profile and best oil extraction rate to support its 5-yr net profit CAGR of 37%. Also, there could be potential upside to production growth. Every 5% increase in production growth will lift net profit by 11%. House expecting 20% CPO production growth in 2013 vs 2012’s 34% yoy (higher than guidance).