Bumitama Agri

Bumitama Agri Ltd
Public (SGX: P8Z)
Industry Food processing
Founded 1996
Founder Lim Gunawan Hariyanto
Headquarters Jakarta
Key people
Products Crude palm oil, palm kernal
Profit $81 million (2012)
Number of employees
 20,000
Parent Harita Group
Subsidiaries Bumitama Gunajaya Agro

Bumitama Agri is the Singaporean subsidiary of parent company Bumitama Gunajaya Agro. Bumitama is an Indonesian oil palm plantation company which cultivates oil palm trees and produces crude palm oil (CPO). It was established in 1996 by the Harita Group with its first acquisition of land in Central Kalimantan. Bumitama owns over 190,000 hectares and has planted 140,000 hectares of oil palm trees, primarily in Central and West Kalimantan. Bumitama owns six CPO mills (five in Kalimantan and one in Riau), which produce more than 450,000 tons of CPO a year. Primary purchasers of their CPO include Wilmar International, the Sinar Mas Group and Musim Mas.[1] In April 2012, Bumitama Agri presented an IPO on the Singapore Stock Exchange at a price of $0.745 per share. As of August 2014, the company's market capitalization is $1.8 billion and its stock price has increased by more than 60 percent since its IPO.[2]

History

Bumitama is part of the Harita Group, which was founded in 1915 by Lim Tju King (an immigrant from the Fujian province of China). His son, Lim Hariyanto Wijaya Sarwono (president and chair of Harita Group),[3] took over and moved into the timber business as a log dealer. He built a small factory and began manufacturing plywood in 1983.

With the help of his two sons, Lim Gunawan Hariyanto (CEO of Harita Group) and Gunardi Hariyanto Lim (Deputy CEO of Harita Group), the group entered the coal mining industry with the 1985 Kelian Equatorial Mining gold project (a joint venture, with Rio Tinto owning 90 percent and the Harita Group owning 10 percent) and the 1988 Lanna Harita coal project.[4][5]

In 1996, Bumitama was established by the Harita Group with its acquisition of 17,500 hectares in Central Kalimantan and the company began its plantation business two years later. In 2002, the group increased its plantation size by buying out smaller planters. By 2007 Bumitama had 50,000 hectares in cultivation, and by 2010 another 50,000 hectares had been planted. As of March 2012, Bumitama had 118,000 hectares in cultivation; for comparison, Singapore (where Bumitama is publicly traded) covers about 69,300 hectares (693 km2).[6]

Partnership with IOI

In 2007, IOI Corporation bought 33 percent of PT Bumitama Gunajaya Agro[7] as part of its plan for strategic investment in Indonesia. Bumitama would benefit from IOI's technical expertise and management support, since IOI has operations throughout the palm-oil supply chain and markets in more than 65 countries.[8]

Oil palm business

Trees

Main article: Oil palm

Oil palm trees have a lifespan of up to 25 years. They are classified as "immature" until three years of age, "young mature" from age four to six and "young prime" from seven to eighteen years of age. Palm oil trees produce fruit known as "fresh fruit bunch" (FFB); its quantity is a factor of a tree's maturity. Immature trees produce the least fruit; young mature trees produce more, and young prime trees produce the most fruit. After 18 years of age, a tree's fruit production gradually decreases. Other factors affecting FFB quantity include the quality of the oil palm seeds, soil and climatic conditions, fertilizer application, plantation-management quality and the timely harvesting and processing of FFB. The amount of CPO which can be extracted depends on the amount of FFB which can be processed in the CPO mills and the efficiency of transportation from the harvest area to the mill. Oil palm companies typically fell trees at about 25 years of age, replanting with new trees.[9]

Crude palm oil

Main article: Palm oil

Crude palm oil (CPO) is a widely consumed vegetable oil whose uses range from processed food to cosmetics.[10] Food production accounts for 73 percent of palm-oil use.[11] Indonesia and Malaysia are the world's largest producers of palm oil, accounting for 85 percent of global output.[12] CPO is extracted from the FFB of oil palm trees. The FFB is transported to the palm-oil mill the day it is harvested. The mill produces CPO and kernels (which can be used to produce palm kernel oil) as a primary product, and biomass as a secondary product.

Business

Land bank and plantations

Bumitama's primary business is cultivating oil palm trees, harvesting FFB and processing it into crude palm oil, and the company owns 190,000 hectares in Central and West Kalimantan. Of this, 119,000 hectares have been planted. The planted land consists of 89,000 hectares of nucleus plantations and 31,000 hectares of mature plantations. In 2011 Bumitama's plantations produced 1,065,644 metric tons of FFB, a yield of 16.3 metric tons per hectare.[13] The company generally transports its harvested FFB to the CPO mills within 24 hours to ensure maximum freshness and yield.

CPO mills

Bumitama owns six CPO mills in Kalimantan and Riau, with a combined FFB processing capacity of 2,070,000 tons per year. In 2011 the company's CPO mills had an average oil-extraction rate (extracted CPO per unit of FFB) of 24 percent,[14] one of the highest in the industry. Bumitama sells its CPO to international companies Wilmar, Sinar Mas and Musim Mas.[15]

Future plans

About 38 percent of the company's land is unplanted, and Bumitama will be able to increase their cultivated plantation land. Most of its palm trees are immature or young, with a weighted average age of five years. Since only 28 percent of the trees have reached peak production age, Bumitama expects FFB yield and CPO production to increase as more of the oil palm trees reach peak-production age.[13]

Corporate social responsibility

Since the beginning of its operations, Bumitama has been committed to CSR. The company is active in the community welfare of its areas of operation, and hopes to be a factor in their improvement.

Education

As of March 2012 the group has built 23 schools in Central Kalimantan, West Kalimantan and Riau, provides scholarships for elementary- to tertiary-level students and sponsors training for teachers and principals. Bumitama provides free tuition, books, and school-bus transportation to all students at these schools.[16]

Medical care

Since 2004, Bumitama has provided free medical services to employees and community residents by building medical centers and supplying drugs and doctors. The company sponsors periodic basic medical check-ups and medication from local doctors.[17]

Houses of worship

The company has built houses of worship (primarily churches and mosques) for community residents.[18]

Environmental care

In 2013, a subsidiary has cleared an orangutan area illegally.[19] In the same year, it also cleared on peat soil.[19]

Roundtable on Sustainable Palm Oil

Bumitama has been a member of the Roundtable on Sustainable Palm Oil (RSPO) since October 2007. The RSPO is a non-profit organization formed in 2004 to promote the growth and use of sustainable oil-palm products with credible global standards and shareholder engagement. According to critics, however, the RSPO greenwashes palm oil companies' destructive practices.[20][21] At least three complaints have been filed against Bumitama Agri for violating RSPO principles, criteria and new-planting procedures.[22][23][24]

Awards

Record

Planting program

The planting program since 2004:[26]

FFB production

Bumitama FFB production has increased at a compounded annual rate of 88.3 percent, from 3,582 tons in 2002 to 1,065,644 tons in 2011. Bumitama's fresh fruit bunch production since 2002:[27]

FFB yield

FFB yield is the industry measurement for fresh fruit bunch per hectare, measured in metric tons and usually a function of tree maturity in that area:

Oil extraction rate

Oil extraction rate (OER) is the amount of CPO extracted per unit of FFB, measured as a percentage:

CPO production

The company's CPO production:[30]

Financial performance

Bumitama's revenue:[30]

Net profits:[31]

Initial public offering

On 12 April 2012, Bumitama launched its initial public offering on the Singapore Stock Exchange. HSBC and DBS Bank were bookrunners for the IPO.[32]

A total of 327,324,000 shares (297,570,000 shares and an additional 29,754,000 in greenshoe) were issued during the listing.[33] During the book building phase the IPO was reportedly 31 times oversubscribed, the highest by any IPO in Singapore since 2007.[34][35]

Bumitama's shares were priced at $0.745 for the IPO. On its first day of trading the stock closed at $0.98, 32 percent above its IPO price, valuing Bumitama's market capitalization at 1.7 billion Singapore dollars.[36] Cornerstone investors for the IPO were Wilmar International, UOB Asset Management, Value Partners Hong Kong,[37] Hwang Investment Management[38] and Target Asset Management.[39]

Management

  1. Lim Gunawan Hariyanto - Executive chairman and chief executive officer
  2. Gunardi Hariyanto Lim - Deputy CEO
  3. Johannes Tanuwijaya - Chief strategy officer
  4. Sie Eddy Kurniawan - Chief financial officer
  5. Roebbianto - Chief operating officer[40]

References

  1. ↑ "Bumitama Main Info".
  2. ↑ "Bloomberg - Bumitama Agri Ltd.".
  3. ↑ "Reuters - Tirta Mahakam Resources Tbk".
  4. ↑ Nyompe, Pius Erick. "The Closure of the Kelian Gold Mine and the Role of the Business Partnership for Development/World Bank" (PDF).
  5. ↑ "Lanna Coal Business".
  6. ↑ "Encyclopedia of Nations - Singapore".
  7. ↑ Castle, James (2010). Indonesian Business: The Year in Review 2007. CastleAsia. p. 82. ISBN 9793780797.
  8. ↑ "IOI - about us".
  9. ↑ Turner, PD (1974). Oil Palm Cultivation And Management. Incorporated Society Of Planters.
  10. ↑ "Palm Oil Truth Foundation - Quick Info".
  11. ↑ Wickramasinghe, Thilan (20 September 2011). "Asian Palm Oil". HSBC Global Research.
  12. ↑ Wickramasinghe, Thilan (20 September 2011). "Asian Palm Oil". HSBC Global Research: 6.
  13. 1 2 "Bumitama Agri Ltd - Prospectus". April 2012: 26.
  14. ↑ "Bumitama Agri Ltd - Prospectus". April 2012: 27.
  15. ↑ "BGA - Operations".
  16. ↑ "BGA - Education".
  17. ↑ "Bumitama Ltd - Prospectus". April 2012: 143.
  18. ↑ "BGA - Religion".
  19. 1 2 Hartmann, K. (2015). Aus kontrolliertem Raubbau: Wie Politik und Wirtschaft das Klima anheizen, Natur vernichten und Armut produzieren. Karl Blessing Verlag. ISBN 9783641156114. Retrieved 2016-05-30.
  20. ↑ "'Certified' Palm Oil Not A Solution — English". Foei.org. Retrieved 2013-10-07.
  21. ↑ "RSPO Dispatch: Oil palm is not development » Rainforest Action Network Blog". Understory.ran.org. Retrieved 2013-10-07.
  22. ↑ "Complaint on: PT. Hati Prima Agro (Bumitama Gunajaya Agro) filed on 02/07/2012".
  23. ↑ "Complaint on: PT. Nabatindo Karya Utama, a subsidiary of RSPO member Bumitama Gunajaya Agro, filed on 11/03/2013".
  24. ↑ "Complaint on: PT. Ladang Sawit Mas, a subsidiary of RSPO member Bumitama Gunajaya Agro, filed on 08/04/2013".
  25. ↑ "Bumitama Agri Ltd - Prospectus". April 2012: 145.
  26. ↑ "Bumitama Agri Ltd - Prospectus". April 2012: 136.
  27. ↑ "Bumitama Agri Ltd - Prospectus". April 2012: 126.
  28. ↑ "Bumitama Agri Ltd - Prospectus". April 2012: 94.
  29. ↑ "Bumitama Agri Ltd - Prospectus". April 2012: 95.
  30. 1 2 "Bumitama Agri Ltd - Prospectus". April 2012: 101.
  31. ↑ "Bumitama Agri Ltd - Prospectus". April 2012: 103.
  32. ↑ "Indonesia's Bumitama to Revive US$160-million Singapore IPO". Biz Daily.
  33. ↑ "Bumitama Agri Ltd - Prospectus". April 2012: 35, 36.
  34. ↑ "Bumitama Agri IPO Over Subscribed 31 Times". Live Trading News.
  35. ↑ "UPDATE 1-Bumitama Agri to raise up to $194 mln in Singapore IPO". Reuters. 2012-04-03.
  36. ↑ Gabriel, Anita (13 April 2012). "Bumitama soars in IPO debut". The Straits Times.
  37. ↑ "Indonesia's Bumitama Agri seen raising $176 mln in Singapore IPO". Reuters. 2012-03-26. Retrieved 2012-03-26.
  38. ↑ "Hwang Investment Management".
  39. ↑ "Indonesia's BGA Said to Seek Up to $176 Million in Singapore IPO". Retrieved 2012-03-26.
  40. ↑ "Bumitama Agri Ltd - Prospectus". April 2012: 178–182.
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