We expect TAPG booked revenue of IDR 10.5 trillion in FY25F (+9.0% YoY), supported by higher sales volumes of CPO (~680 thousand tons, +6.9% YoY) and PKO (~27 thousand tons, +9.2% YoY). The strong growth was driven by robust domestic demand following the B40 biodiesel mandate, as well as solid PKO demand as a cocoa butter substitute. CPO remains the main revenue contributor (~87%), followed by palm kernel (~9%) and PKO (~4%).

In terms of profitability, TAPG is projected to record a net profit of IDR 3.4 trillion (+10.9% YoY), with a solid net profit margin at 32.8%. This strong performance is underpinned by manageable cost of goods sold, stable fertilizer costs (~IDR 802 billion, +2.0% YoY), and controlled external FFB purchases (~17–18% of total processed volume). Meanwhile, lower interest expenses (estimated at IDR 53 billion, –16.6% YoY) further strengthen the company’s capital structure and support profitability.

TAPG also maintains strong operational fundamentals, with a blended plantation age profile of 14.2 years and ~82% of planted area in the productive phase (7–20 years old). The nucleus estate yield remains solid at ~23 tons/ha, supporting steady production and healthy margins. Total FFB processed is projected to rise to ~3.96 million tons (+2.7% YoY) in FY25F, with internal supply remaining dominant (~82–83%).

On the cash flow side, robust free cash flow (7Y CAGR: 24.7%) enables an aggressive dividend policy, reflected in a sharply higher total dividend of IDR 3.3 trillion in FY24 (DPR: 106.3%). The DPS increased significantly to IDR 167 (yield: ~25%), while the cash balance remains healthy at around IDR 1 trillion by end-2024. This supports future expansion while maintaining attractive shareholder returns.

We initiate coverage on TAPG with a BUY recommendation and a target price of IDR 1,300 per share, reflecting FY25F valuations of 7.5x PER and 2.2x PBV, using a DCF approach (WACC: 16.4%; terminal growth: 2%). We like TAPG for its productive plantation profile, solid balance sheet, and strong cash generation, which provide flexibility for measured long-term growth.

Key risks include lower-than-expected FFB yield, CPO price volatility, and unfavorable regulatory changes. Overall, TAPG is well-positioned to maintain strong operational performance and deliver sustainable value going forward.

By PHINTRACO SEKURITAS | Research
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