Bumitama's FY2025 earnings beat Simadiputra's forecast and he expects the company's bottom line to ease somewhat by 6.1% to 2.6 trillion rupiah this year.
"However, with limited export levies and taxes implemented so far, we see upside risk to our selling price and earnings forecasts," says Simadiputra.
"Earnings should trend higher in 2026, mainly on a decent palm oil price and higher output trend. Bumitama has been paying good dividends; we see room to sustain said dividend and offer a decent yield of 5-6% to investors," he adds.
"If Bumitama pursues inorganic growth to expand its production volumes, it may become a key catalyst. As of now, Bumitama can maximise margins through cost efficiencies on its nucleus estates or by increasing mill utilisation to above 75% via external fruit purchases," he adds.
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From his perspective, Bumitama's share price, even having gained 40.74% year to date to $1.90 at close of April 6, might see further upside given the positive market outlook.
His revised target price of $2.30 is based on 20.4x FY2026 earnings - a valuation multiple that is above Bumitama's historical PE level but is deemed justified due to "persistently high" crude palm oil prices and the company’s capability to maintain margin performance despite its reliance on external fruit purchases.
