OCBC Investment Research
Date of Report: 27 August 2025
Bumitama Agri Ltd Shines as a Dividend Play: In-Depth Analysis and Peer Comparison for 2025

Overview: Bumitama Agri Ltd Delivers Strong Returns Amidst Market Optimism

Bumitama Agri Ltd (BAL), a major upstream producer of crude palm oil (CPO) and palm kernel (PK) in Indonesia, has captured investor attention with its robust performance and commitment to shareholder returns. Since the last update, BAL’s share price has surged by 33%, outperforming expectations and leading OCBC Investment Research to revise its fair value estimate from SGD1.05 to SGD1.20. However, with limited upside remaining, the rating has been downgraded to HOLD, though the stock remains attractive for total returns and dividend yield.

Investment Thesis: Productivity and Policy Drive Outperformance

BAL operates 186,000 hectares of plantations across Central and West Kalimantan and Riau, with an average age of 14.7 years.
The company’s plantations are located in regions conducive to high-yield oil palm cultivation, supporting above-industry average productivity.
Market perception has shifted, increasingly viewing BAL as a reliable dividend yield play due to its revised policy: increasing payout ratio from a maximum 40% to a range of 40-60%.
BAL’s superior yields, quality plantations, and operational discipline position it to benefit from industry fundamentals, including constrained supply and growing demand for palm oil.

Share Price and Dividend Policy: Rally and Revision

BAL’s share price closed at SGD1.12 on 26 August 2025, marking a 33.3% rally since the post-1H25 results update.
Interim dividend of 3.63 Singapore cents per share—more than triple the 1H24 payout—aligns with the higher end of the new dividend policy.
The company’s forward 12-month dividend yield stands at approximately 6%, maintaining appeal for income-focused investors.

Financial Performance Summary: Revenue, Margins, and Profitability

Peer Comparison: Bumitama vs. Industry Rivals

Key takeaway: BAL trades at a premium P/E and P/B relative to some peers, but offers an attractive dividend yield and solid ROE, reinforcing its appeal to yield-focused investors and those seeking operational resilience.

Detailed Financial Highlights: Income Statement and Ratios

ESG & Sustainability Initiatives: Progress and Challenges

BAL achieved an 18% reduction in greenhouse gas (GHG) emissions intensity from its 2016 baseline in FY24, progressing toward its 30% reduction target by 2030.
Methane capture facilities: One installed, three more planned.
Trials underway for further GHG reduction, including composting and biocharcoal.
RSPO certification for all mills has been postponed to 2027.
Fire incidents within concessions have dropped to 89 in 2024 from 151 in 2023.
Community engagement: Social Forestry scheme supports local communities without expanding into ecologically sensitive land. BAL has established 43 Bumitama Schools, educating over 4,000 local students as of end FY24.
Zero cases of legal non-compliance in 2023, with a continued focus on regulatory adherence.

Market Position and Potential Catalysts

Favourable weather conditions are likely to enhance production volumes.
Indonesian government policies remain supportive for the sector.
Potential for accretive acquisitions to drive further growth.
Risks include volatile CPO prices, execution risks that could affect margins, and regulatory uncertainties impacting the palm oil industry.

Company Profile: Bumitama Agri Ltd

Founded in 1996 by the Harita Group, BAL has grown into a leading CPO and PK producer operating across Central and West Kalimantan and Riau. With 15 processing mills and a total planted area of over 187,600 hectares as of 2022, BAL is a recognized player on the Singapore Exchange, winning multiple industry accolades.

Revenue Breakdown and Segment Performance

Monthly CPO Price and Production Trends

Average monthly CPO prices and production volumes have shown volatility, impacted by seasonal and market factors.
Production data and MoM price/volume changes point to resilience in BAL’s operational base.

Conclusion: Outlook, Risks, and Investment Considerations

While Bumitama Agri Ltd’s share price rally has limited further upside, its strong dividend policy, operational efficiency, and sustainability leadership make it a standout in the palm oil sector. Investors should weigh potential catalysts and sector risks, with BAL remaining attractive for those seeking consistent yields and exposure to Indonesia’s upstream agri-sector.

Other Companies Covered: Peer Profiles and Metrics

First Resources Ltd (FRLD.SI): Strong ROE and dividend yield, trading at a lower P/E and P/B than BAL.
Golden Agri-Resources Ltd (GAGR.SI): Lower valuation multiples, smaller dividend yield, and less visibility on ROE metrics.
Wilmar International Ltd (WLIL.SI): Higher EV/EBITDA, lower ROE and dividend yield versus peers, reflecting diversified business exposure.

Broker Ratings Methodology

BUY: Total expected returns (excluding dividends) >10% for large caps; >30% for small caps.
HOLD: Returns between +10% and -5% for large caps; +/-30% for small caps.
SELL: Returns less than -5% for large caps; less than -30% for small caps.

Final Thoughts

Bumitama Agri Ltd stands out for its shareholder returns and operational excellence, while peers offer various value and risk profiles. Investors seeking yield, sustainability, and resilience in the agri-sector should keep a close watch on BAL and its evolving story in the palm oil industry.