BWPT
Contact our analyst Achmadi
BUY
4th June 2024
Current price Rp 51
Target price Rp 75
4th June 2024
Current price Rp 51
Target price Rp 75
Small Increase in Annual Production
In Q1-24, BWPT’s total production grew slightly by 3.49% YoY, with FFB as the primary driver, growing by 9.86% YoY. However, CPO and PK decreased by -11.31% YoY and -10.70% YoY, respectively. On a quarterly basis, production experienced a significant decrease of -11.79%, with PK showing the largest drop of -21.25%. CPO and FFB were down by -17.12% and -9.48% YoY, respectively. These declines are attributed to seasonal trends and the impact of numerous public holidays in Q1-24 and Q2-24, which will also affect overall production in 2024. The forecasted production for 2024 is 1.32 million MT, representing a decrease of -2.31% YoY.
In Q1-24, BWPT’s total production grew slightly by 3.49% YoY, with FFB as the primary driver, growing by 9.86% YoY. However, CPO and PK decreased by -11.31% YoY and -10.70% YoY, respectively. On a quarterly basis, production experienced a significant decrease of -11.79%, with PK showing the largest drop of -21.25%. CPO and FFB were down by -17.12% and -9.48% YoY, respectively. These declines are attributed to seasonal trends and the impact of numerous public holidays in Q1-24 and Q2-24, which will also affect overall production in 2024. The forecasted production for 2024 is 1.32 million MT, representing a decrease of -2.31% YoY.
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Robust Profitability
Although productivity in Q1-24 decreased, impacting sales revenue down by Despite the decline in productivity in Q1-24, which caused a -9.80% drop in sales revenue, BWPT managed to generate robust profitability. Net Income Attributable to the Parent grew by 159.95%, reaching IDR 47.49 billion, driven by a decrease in COGS and Other Income (Expense) by -18.79% YoY and -21.64% YoY, respectively. Additionally, both Interest Expense and Amortization Expense decreased by -22.29% YoY and -10.67% YoY, attributed to the company's strategy of utilizing more internal cash and reducing bank loans. EBITDA reached IDR 316.61 billion, marking a growth of 25.17% YoY. It is forecast that BWPT will continue to generate more profit, with Net Income Attributable to the Parent and EBITDA expected to grow by 22.80% YoY and 16.87% YoY, reaching IDR 217.38 billion and IDR 1.31 trillion, respectively.
Improved Solvency
BWPT’s solvency has shown significant annual improvement, evident in its Q1-24 Debt-to-Equity Ratio (DER) and Financial Leverage Ratio, which decreased to levels of 2.21x and 5.01x from 2.72x and 6.24x, respectively. This improvement stems from its strategy to reduce financing from banks, as indicated by the decrease in Total Interest-Bearing Liabilities by -5.45% QoQ, with long-term bank loans decreasing by -6.00% QoQ. We forecast that in 2024, BWPT’s DER and Financial Leverage Ratio will stand at levels of 1.85x and 4.34x, respectively.
Investment Grade Rating from PEFINDO
BWPT has recently attained an A- rating from PEFINDO, classifying it as Investment Grade. This rating indicates the company's strong ability to fulfil its long-term financial commitments, albeit with potential vulnerability to adverse changes in conditions. Leveraging this PEFINDO rating, BWPT intends to raise funds via the debt-capital market, specifically through Green/Sustainable Bonds in the future. This decision is driven by the allure of cheaper and lower interest rates compared to bank loans.
Valuation: BUY, 47% potential upside
Based on Q1-24 results, our EV/EBITDA target is 5.14x. We maintain our "Buy" recommendation with a target price of IDR 75/share, which equates to a valuation of 10.76x PER and offers a potential 47% upside.
Although productivity in Q1-24 decreased, impacting sales revenue down by Despite the decline in productivity in Q1-24, which caused a -9.80% drop in sales revenue, BWPT managed to generate robust profitability. Net Income Attributable to the Parent grew by 159.95%, reaching IDR 47.49 billion, driven by a decrease in COGS and Other Income (Expense) by -18.79% YoY and -21.64% YoY, respectively. Additionally, both Interest Expense and Amortization Expense decreased by -22.29% YoY and -10.67% YoY, attributed to the company's strategy of utilizing more internal cash and reducing bank loans. EBITDA reached IDR 316.61 billion, marking a growth of 25.17% YoY. It is forecast that BWPT will continue to generate more profit, with Net Income Attributable to the Parent and EBITDA expected to grow by 22.80% YoY and 16.87% YoY, reaching IDR 217.38 billion and IDR 1.31 trillion, respectively.
Improved Solvency
BWPT’s solvency has shown significant annual improvement, evident in its Q1-24 Debt-to-Equity Ratio (DER) and Financial Leverage Ratio, which decreased to levels of 2.21x and 5.01x from 2.72x and 6.24x, respectively. This improvement stems from its strategy to reduce financing from banks, as indicated by the decrease in Total Interest-Bearing Liabilities by -5.45% QoQ, with long-term bank loans decreasing by -6.00% QoQ. We forecast that in 2024, BWPT’s DER and Financial Leverage Ratio will stand at levels of 1.85x and 4.34x, respectively.
Investment Grade Rating from PEFINDO
BWPT has recently attained an A- rating from PEFINDO, classifying it as Investment Grade. This rating indicates the company's strong ability to fulfil its long-term financial commitments, albeit with potential vulnerability to adverse changes in conditions. Leveraging this PEFINDO rating, BWPT intends to raise funds via the debt-capital market, specifically through Green/Sustainable Bonds in the future. This decision is driven by the allure of cheaper and lower interest rates compared to bank loans.
Valuation: BUY, 47% potential upside
Based on Q1-24 results, our EV/EBITDA target is 5.14x. We maintain our "Buy" recommendation with a target price of IDR 75/share, which equates to a valuation of 10.76x PER and offers a potential 47% upside.
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