Weak output, heavy levies to slam Bumitama Agri’s Q2 profits

Net CPO price received will likely be flattish.

Bumitama Agri’s (BAL) results for Q2 are likely to disappoint, say analysts, as weak output and heavy export levies weigh down on the firm’s profits.

According to a report by Maybank Kim Eng, Malaysia Palm Oil Board's spot crude palm oil (CPO) price averaged USD 650/t.

Taking into consideration the USD 50/t CPO export levy imposed by the Indonesian government since 16 July 2015, the net CPO price received will likely be flattish YoY, though it would reflect a 15% spike QoQ.

With BAL's low output, estimates place BAL's 2Q16 core net profit to come in at IDR 143b-172b, or roughly $14.79m-17.79m.

However, BAL may see a turnaround in H2.

“Although we expect significantly better 2H16 output, there is risk that our 8% FFB output growth imputed forecast for 2016 may not be achieved. On the brighter side, its 2H16 forward sales to Wilmar equivalent to MYR2,450/t (gross) CPO price have locked in much of its 2H earnings visibility,” Maybank Kim Eng notes.