Bumitama

Bumitama: UOB Kay Hian maintains Buy with $1.28 TP. House note of Positive feedback from a two-day non-deal roadshow. Participants were mostly concerned with the CPO price fluctuations. Mgt acknowledged that 2013 would be very challenging but will focus on delivering strong production growth and maintaining high efficiency to buffer the price fluctuations. Add that it is getting difficult to find new and large landbank and this has become a major barrier of entry for newcomers. Grp will continue to focus on Kalimantan for landbank expansion via joint ventures with small estate holders who are adjacent to its current landbank or getting existing licences from the local authority for those who fails to meet the requirements. Since its IPO listing in Apr 12, BAL has added about 21,865ha (5,522ha planted), bringing its estate size to a total of 212,818ha. In view of its consistently more than 12,000ha of planting in the last eight yrs and possibly in the next four years, house believe grp will continue to deliver a production growth of above 15% at least for the next five yrs, assuming no weather disruption.