Bumitama

Bumitama: 3Q13 net profit decreased 5.2% y/y to IDR168.8b while revenue climbed 7% to IDR 905.9b. Increased revenue was attributable to overall increase in CPO and Palm kernel (PK) sales volume by 8.4% and 31% respectively. However, revenue was slightly offset by CPO and PK prices for the quarter. Avg prices for CPO fell 2.8% to IDR 7,175/kg, while PK prices fell 2.5% to IDR 3.156/kg. Gross margins slid from 42.5% to 37.1% as a result of lower ASP. Forex loss almost doubled to IDR 19.1b from translation to USD denominated loans, while selling expenses increased 78.4% to IDR 27b on increased sales volume. MBKE attributed weak results to 1) lower than expected FFB production of 257k (+4% y/y) due to biological tree stress, which is affecting the sector in general, 2) low CPO ASP. Estimated all-in cost of production was IDR 2,911/kg (+9% y/y) The house expects a better 4Q13 performance underpinned by stronger 4Q output on delayed peak production quarter for 2013, and recent surge of CPO ASP above IDR8,000/kg in 4Q13. The house maintains a Buy with TP of $1.14 (decreased from $1.24) after factoring weakness in FFB output, and CPO ASP for 2013.