Bumitama

Bumitama: Maybank-KE visited Bumitama’s PT Windu Nabatindo Lestari oil palm estate in Central Kalimantan recently. The 29,472ha estate has its own mill, a R&D centre, a learning centre, a weather station, a school and accommodation for workers. The key takeaways from the visit are that: i) Central Kalimantan is ideal for oil palm planting, given its well-distributed rainfall of 3,000mm a year, 5-7 sunshine hours a day and fertile virgin soil; and ii) Management will focus first on the community – a key source of its labor – to ensure the smooth and successful running of all estate operations. Since 2004, Bumitama has been growing at an impressive rate of ~9700 ha of new nucleus planting each year, hence to address potential labor issues, Bumitama has invested in an in-house learning centre to recruit from the local community and train future workers for its internal requirements. The house maintains Buy with TP $1.24, pegged at 16x FY14e P/E.