Bumitama Agri

Bumitama Agri: 3Q14 results were in line, with net profit jumping 69.1% to Rp285.4b and taking 9M14 net profit to Rp886.6b (+86.6%). Revenue was up 50.8% to Rp1.4t, led by a 50.8% rise in CPO sales to Rp1.3t and a 50.5% rise in Palm Kernel (PK) sales to Rp123.5b. Gross margin improved to 44.7% versus 37.0% previously, mainly due to increase in selling price and sales volume of both CPO and PK during the period. CPO sales volume was up 33.0% top 152,666 MT and ASP advanced 13.4% to Rp8,140 per Kg, while PK sales volume rose 2.6% to 26,650 MT and ASP was up 46.8% to Rp4,633 per Kg. Operationally, CPO extraction rate improved to 23.2% from 22.6% the previous year, while PK extraction rate was flat at 4.3%. Bottom-line was weighed by a 99.4% rise in general and admin expenses to Rp58.6b, 60.3% rise in selling expenses to Rp43.0b, 191.1% rise in finance costs at Rp32.0b and 200.0% rise in other expenses to Rp19.1b. Going forward, the group remains positive on the longer term outlook given the strong fundamental of palm oil which is supported by growing demand for edible oils in emerging market and the substitute and alternative usage of palm oil. Overall fundamentals remain positive with the group having a relatively young tree age profile of 6.0 years, with at least 25% of planted nucleus still at the immature stage, suggesting further volume production upside going forward.