BWPT
Contact our analyst Revita
BUY
21st Dec 2023
Current price Rp 53
Target price Rp 68
21st Dec 2023
Current price Rp 53
Target price Rp 68
Maintaining Productivity Growth
In 9M23, FFB production rose by +7% YoY for FFB nucleus and increased by +11% for FFB plasma compared to 9M22. CPO and palm kernel production decreased slightly by -4% YoY and -1% YoY, respectively, compared to 9M22. This is due to the El-Nino factor during 3Q23, affecting a delay in crop ripening. Additionally, OER increased from 22.07% in 3Q22 to 22.72% in 3Q23. Despite a -9% YoY drop in the average selling price of CPO, it was offset by an 8% YoY increase in CPO sales volume to 260,711MT from 242,376MT in 3Q22. BWPT's focus on core strategic areas and divestment of non-strategic plantations aims to maximize productivity in existing plantations in East Kalimantan, Central Kalimantan, South Kalimantan, and Papua. Moreover, there are plans to increase plant capacity, boost plant utilization, and construct a KCP (Kernel Crushing Plant) and biogas plants. In 2024, BWPT plans to build a biogas power plant and KCP in Central Kalimantan, along with a Plant/Mill extension of 30 tph. Based on 9M23 results, we adjust our estimates for the total production of FFB and CPO in 2023-2024. The adjustment in forecast for FFB and CPO production reflects the impact of the El-Nino factor in 3Q23, targeting a CAGR of 10% and 26%, respectively, compared to 2022A.
In 9M23, FFB production rose by +7% YoY for FFB nucleus and increased by +11% for FFB plasma compared to 9M22. CPO and palm kernel production decreased slightly by -4% YoY and -1% YoY, respectively, compared to 9M22. This is due to the El-Nino factor during 3Q23, affecting a delay in crop ripening. Additionally, OER increased from 22.07% in 3Q22 to 22.72% in 3Q23. Despite a -9% YoY drop in the average selling price of CPO, it was offset by an 8% YoY increase in CPO sales volume to 260,711MT from 242,376MT in 3Q22. BWPT's focus on core strategic areas and divestment of non-strategic plantations aims to maximize productivity in existing plantations in East Kalimantan, Central Kalimantan, South Kalimantan, and Papua. Moreover, there are plans to increase plant capacity, boost plant utilization, and construct a KCP (Kernel Crushing Plant) and biogas plants. In 2024, BWPT plans to build a biogas power plant and KCP in Central Kalimantan, along with a Plant/Mill extension of 30 tph. Based on 9M23 results, we adjust our estimates for the total production of FFB and CPO in 2023-2024. The adjustment in forecast for FFB and CPO production reflects the impact of the El-Nino factor in 3Q23, targeting a CAGR of 10% and 26%, respectively, compared to 2022A.
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Back to profit is on track
BWPT is on track to return to bottom-line profitability, as shown in 9M23, where BWPT reported a net profit of IDR 88.5bn, compared to a net loss of IDR 16.9bn in 9M22, indicating a return to profitability. BWPT has continued to generate positive free cash flow. We adjust our targets for 2023F and 2024F to a net profit of IDR 152bn and IDR 209bn, respectively, supported by the maturation of plantations.
Valuation: BUY, 28% potential upside
Based on 9M23 results, we adjust our target EV/EBITDA to 15.05X and EV/ha to 9,302 USD/ha. We maintain our BUY recommendation with a higher TP of IDR 68/share, reflecting a valuation of 10.34X PER. With 28% upside potential, we give our BUY recommendation.
BWPT is on track to return to bottom-line profitability, as shown in 9M23, where BWPT reported a net profit of IDR 88.5bn, compared to a net loss of IDR 16.9bn in 9M22, indicating a return to profitability. BWPT has continued to generate positive free cash flow. We adjust our targets for 2023F and 2024F to a net profit of IDR 152bn and IDR 209bn, respectively, supported by the maturation of plantations.
Valuation: BUY, 28% potential upside
Based on 9M23 results, we adjust our target EV/EBITDA to 15.05X and EV/ha to 9,302 USD/ha. We maintain our BUY recommendation with a higher TP of IDR 68/share, reflecting a valuation of 10.34X PER. With 28% upside potential, we give our BUY recommendation.
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