Billion Dollar Club: FOOD & BEVERAGES + FOOD & DRUG RETAILING

Bumitama Agri, a regular at the Billion Dollar Club (BDC) over the years, came out tops within its industry sector in the Centurion Club last year, which recognises companies with a market value of below $1 billion. This year, with consistently better performance, Bumitama has emerged as a big winner in its industry sector — and to add further accolades, its wins are recognised in the BDC for companies with a market value above $1 billion.

In addition to the overall sector, the company won returns to shareholders over three years and growth in profit after tax (PAT). For the three years taken into consideration for this year’s BDC, the company recorded a CAGR of 21.7% for returns to shareholders and 29.6% for profit after tax.

Bumitama describes itself as one of the leading producers of crude palm oil and palm kernels in Indonesia. Its core business encompasses the cultivation of oil palm, harvesting of fresh palm fruit bunches, and processing of the fruits. Founded in 1996, it was listed on the Singapore Exchange S68 in 2012.

Bumitama prides itself on its adaptability to capture emerging opportunities amid shifting market conditions. In July 2023, it recorded an all-time high monthly yield of 2.1 metric tonnes (MT) per hectare or 386,000 MT of fresh fruit brunches harvested from its nucleus and plasma estates. As the company describes it, despite a year of relatively flat fresh fruit branch production by most peers in the industry, the company was able to maintain its total output from both the nucleus and plasma estates at 3.72 million metric tonnes, equivalent to a CAGR of 3.3% over the past five years, bringing full-year FY2023 production to 5.38 million metric tonnes.

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The company boasts a total annual fresh fruit branch processing capacity of 6.39 million MT. Its 15 palm oil mills are located close to the plantation estates, allowing prompt evacuation and processing.

Bumitama calls the most recent FY2023 a year marked by “price volatility” and alludes to its “consistent and meticulous” financial management, which helped to hold up both ebitda and net profit margins even as revenue dropped. Earnings dipped by 13.3% y-o-y to IDR2.45 trillion ($205.9 million), but they are still on a multi-year trend upwards.

Sheng Siong Group, with a weighted ROE of 30.1%, was named the winner in this category for this industry sector. The household name is one of the largest supermarket chains in Singapore. From its dozens of outlets across the island, predominantly in the heartlands, it sells not just fresh food but also packaged foodstuffs and other general merchandise. In addition, Sheng Siong offers over 1,600 products under its 23 house brands, ranging from food products to paper goods as alternatives to other mainstream brands.

For its FY2023 ended December 2023, Sheng Siong reported earnings of $134 million, up 0.3% y-o-y. Revenue was up 2.1% y-o-y to $1.37 billion. Shareholders were rewarded with a total dividend of 6.25 cents per share.

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In his earnings commentary, CEO Lim Hock Chee warns that competition in the supermarket industry is expected to remain keen with active promotions being conducted by competitors. “To tackle the margin pressures, we are working closely to seek opportunities for margin enhancement through further refinement of our sales mix.”