Nucleus fresh fruit bunches (FFB) output rose 8.2% y-o-y in 1QFY2026, above both RHB's 3% projection and management's own full-year guidance of 0%–5%. The report notes that while Bumitama expects FFB growth to pick up in the second quarter and peak in the third, management is keeping its full-year guidance unchanged (at 0%–5%) given an anticipated moderation in 4QFY2026. Crude palm oil (CPO) sales volume jumped 25% y-o-y on inventory drawdowns. RHB maintains its 2%–4% FFB growth forecast for FY2026–FY2027.
On costs, the report points out that management now guides for unit costs to rise approximately 10% y-o-y in FY2026, up from its previous guidance of 5%–10%, “on the back of higher fertiliser and logistics costs”. Bumitama has already tendered for almost 100% of its FY2026 fertiliser requirements at prices 6%–7% higher y-o-y. RHB thus makes no changes to its own cost assumptions, having already pencilled in a 10% rise.
Bumitama also raised its dividend payout range to 60%–75% from 40%–60%, in line with its 75% payout in FY2025. RHB has lifted its payout assumption to 65%–70% from 60%–65% accordingly.
At 12 times its FY2026 P/E, which is the highest end of its peer range of 7 times – 12 times and well above its historical average of 6 times, the report considers “valuations are fairer now” following the recent correction. The target price is based on 12 times Bumitama’s FY2026 P/E with a 10% ESG discount.
See also: Broker's Digest: AIMS, Aoxin, AvePoint, Beng Kuang, MUST, Starhub, UMS
Shares in Bumitama Agri closed 5 cents higher or 2.67% up at $1.95 on May 14.
