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RHB downgrades Bumitama Agri to 'neutral' with lower target price of 80 cents

Samantha Chiew
Samantha Chiew • 2 min read
RHB downgrades Bumitama Agri to 'neutral' with lower target price of 80 cents
More balanced year ahead for Bumitama Agri. Photo: Stock image
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RHB Bank Singapore is downgrading is call on Bumitama Agri to "neutral" from "buy" previously with a lower target price of 80 cents from 90 cents previously.

The Singapore research team says: "We expect 2026 to be a more balanced year fundamentally, with lower y-o-y crude palm oil (CPO) prices, but geopolitical risks will translate to more volatility. We lower our CPO, but raise our palm kernel (PK) price assumptions for FY2025-FY2027. Valuation is fair at 8x FY26F P/E, within its peers’ 6-11x and close to its historical mean. Stock will also be supported by a FY26F dividend yield of 8%."

Thus far, RHB notes that spot CPO prices have moderated from RM4,600-RM4,800/tonne in 1Q2025 to a low of RM3,780 in May, only to bounce back to RM3,900-RM4,100 currently. The decline was mainly driven by geopolitics in the light of US trade tariffs, wars and crude oil prices falling as a result, all of which pushed CPO prices in the same direction.

"We highlight that the correlation between CPO prices and crude oil prices surged to 0.47 in Apr 2025 from -0.6 in 1Q2025, and subsequently rose further to the current levels of 0.68, due to more geopolitical risks," says RHB.

On the outlook, RHB expects CPO prices to remain volatile given the ever-changing geopolitical situation. Fundamentally however, global supply and demand will likely be more balanced in 2026, as supply improves, while demand should pick up given the more attractive relative prices, the firm believes.

"We roll forward our valuation to 2026 and lower our target P/E to 9x FY2026 (from 10x FY2025), after adjusting for its current
historical average," says RHB.

See also: Citi keeps ‘sell’ call on SGX but raises target price ahead of ‘well anticipated’ FY2025 results

As at 10.45am, shares in Bumitama Agri are trading at 76 cents, 11% lower ytd.

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