"Had it not been for an inventory build-up in 1QFY25, revenue and profits would have been better," says Ong Chee Ting of Maybank Securities, who has kept his "buy" call.
However, with the Indonesian government raising export levies for crude palm oil from 7.5% to 10% with effect from May 17, Ong has lowered his earnings forecast for Bumitama by 3% this current FY2025 and 5% for FY2027.
By applying the same 8x FY2025 earnings valuation multiple, Ong has derived a new target price of 83 cents, down from 86 cents.
Separately, RHB Bank Singapore has cut its target price from $1.17 to 90 cents on expectations that earnings will moderate in the current 2QFY2025, to take into account higher costs.
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Bumitama's current valuation, at 7.9x FY2025 earnings, is "appealing", while its FY2025 yield of 8.5% is a "sweetener", according to RHB, which has a "buy" call on this stock.
The new target price of 90 cents is based on the same 10x FY2025 earnings valuation multiple.
Ada Lim of OCBC Investment Research, meanwhile, has kept her "buy" call but with a slightly raised fair value of 97.5 cents, from 96.5 cents.
She notes that crude palm oil prices have come off recent highs of RM4,320 per tonne but is seen to be supported at the RM3,900 level.
Reasons include inventory replenishment in major markets of India and China, a recovery in production volumes, plus a recovery in prices in soybean oil prices, a substitute.
