BWPT
Contact our analyst Achmadi
BUY
18th April 2024
Current price Rp 53
Target price Rp 80
18th April 2024
Current price Rp 53
Target price Rp 80
Modest Decrease in Productivity
In 2023, BWPT experienced a slight decline in productivity compared to the previous year, influenced by the El-Nino phenomenon. In December 2023, total CPO production decreased by -2.64% year-over-year (YoY), to 320,107 metric tons. Conversely, FFB production saw a 4.25% YoY increase to 975,252 metric tons (nucleus-only). Improvements were noted in the average Oil Extraction Rate (OER) and Kernel Extraction Rate (KER), which increased by 96 and 15 basis points respectively, reaching 22.96% and 4.25%. These gains are attributed to the company’s strategic improvements in infrastructure and public facilities. We predict that in 2024, BWPT will continue to enhance its productivity, with anticipated
growth in CPO production by 2.98% YoY and PK production by 9.35% YoY.
In 2023, BWPT experienced a slight decline in productivity compared to the previous year, influenced by the El-Nino phenomenon. In December 2023, total CPO production decreased by -2.64% year-over-year (YoY), to 320,107 metric tons. Conversely, FFB production saw a 4.25% YoY increase to 975,252 metric tons (nucleus-only). Improvements were noted in the average Oil Extraction Rate (OER) and Kernel Extraction Rate (KER), which increased by 96 and 15 basis points respectively, reaching 22.96% and 4.25%. These gains are attributed to the company’s strategic improvements in infrastructure and public facilities. We predict that in 2024, BWPT will continue to enhance its productivity, with anticipated
growth in CPO production by 2.98% YoY and PK production by 9.35% YoY.
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Significant Profitability Growth
BWPT demonstrated robust profitability in 2023, with Net Income Attributable to the Parent Entity surging by 912.84% YoY to IDR 177.025 billion. This growth occurred despite a -8.08% decline in revenue, attributed to a decrease in CPO prices. Additionally, the Cost of Goods Sold (COGS) dropped by -11.16% YoY, with tax benefits further bolstering profits. This improvement in COGS positively influenced EBITDA, which rose by 1.85% YoY to IDR 1.12 trillion. We project that BWPT’s EBITDA will continue to grow, reaching IDR 1.22 trillion in 2024, a 9.21% increase YoY.
Improved Solvency
BWPT is dedicated to reducing bank loans and interest expenses. In FY23, the company's loan balance declined by -28.79% YoY to IDR 5.085 billion. This reduction improved the Debt-to-Equity (D/E) ratio from 3.49x to 2.34x, and the Financial Leverage Ratio from 5.99x to 5.35x. We forecast that in 2024, BWPT’s D/E and Financial Leverage Ratios will decrease further to 1.88x and 4.42x, respectively.
Strong ESG Commitment
BWPT is committed to environmental, social, and governance (ESG) practices, notably through its biogas initiative. The Sukadamai Biogas Power Plant, launched in 2019 in South Kalimantan, aims to manage waste from a palm oil mill. By 2023, the plant generated 11.1 million kWh of electricity and reduced CO2 emissions by 66,000 tons. Moreover, progress in sustainability certifications is notable; 71% of the mills are certified by ISPO and one-seventh by RSPO. In January 2024, two mills in Central Kalimantan achieved RSPO certification, raising the total to 43%. These milestones underscore BWPT’s commitment to sustainability and environmental responsibility.
Valuation: BUY, 52% potential upside
Based on FY23 results, our EV/EBITDA target is 5.56x. We maintain our "Buy" recommendation with a target price of IDR 80/share, which equates to a valuation of 22.61x PER and offers a potential 52% upside, recommendation.
BWPT demonstrated robust profitability in 2023, with Net Income Attributable to the Parent Entity surging by 912.84% YoY to IDR 177.025 billion. This growth occurred despite a -8.08% decline in revenue, attributed to a decrease in CPO prices. Additionally, the Cost of Goods Sold (COGS) dropped by -11.16% YoY, with tax benefits further bolstering profits. This improvement in COGS positively influenced EBITDA, which rose by 1.85% YoY to IDR 1.12 trillion. We project that BWPT’s EBITDA will continue to grow, reaching IDR 1.22 trillion in 2024, a 9.21% increase YoY.
Improved Solvency
BWPT is dedicated to reducing bank loans and interest expenses. In FY23, the company's loan balance declined by -28.79% YoY to IDR 5.085 billion. This reduction improved the Debt-to-Equity (D/E) ratio from 3.49x to 2.34x, and the Financial Leverage Ratio from 5.99x to 5.35x. We forecast that in 2024, BWPT’s D/E and Financial Leverage Ratios will decrease further to 1.88x and 4.42x, respectively.
Strong ESG Commitment
BWPT is committed to environmental, social, and governance (ESG) practices, notably through its biogas initiative. The Sukadamai Biogas Power Plant, launched in 2019 in South Kalimantan, aims to manage waste from a palm oil mill. By 2023, the plant generated 11.1 million kWh of electricity and reduced CO2 emissions by 66,000 tons. Moreover, progress in sustainability certifications is notable; 71% of the mills are certified by ISPO and one-seventh by RSPO. In January 2024, two mills in Central Kalimantan achieved RSPO certification, raising the total to 43%. These milestones underscore BWPT’s commitment to sustainability and environmental responsibility.
Valuation: BUY, 52% potential upside
Based on FY23 results, our EV/EBITDA target is 5.56x. We maintain our "Buy" recommendation with a target price of IDR 80/share, which equates to a valuation of 22.61x PER and offers a potential 52% upside, recommendation.
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