SSMS, Indonesia’s largest listed CPO company by market cap, is well-positioned to capitalize on elevated CPO prices, driving its focus on export expansions through increased production. The company targets 2025F FFB yield of 23.7 tons/ha (+16bps YoY) with 25% OER (+250bps YoY), translating to 570k tons of CPO (+12.9% YoY) while maintaining downstream integration through 70.2% owned CBUT. Higher production, coupled with cost efficiencies and deleveraging, is strengthening profitability, with 2025F net profit to reach IDR 1.2tn (+38.3% YoY). Strong cash flow supports 50% DPR, implying 24.0% dividend yield. With further upside from B40 implementation, we re-initiate coverage on SSMS with BUY and DCF-based TP of IDR 2,500, reflecting 20.6x P/E 2025F and 55.3% upside potential.

Integrated CPO company with vast, young profile. SSMS, based in Pangkalan Bun, Central Kalimantan, operates an integrated CPO value chain spanning 115,571 ha, with 82,634 ha planted. The company has a plantation profile in its prime, with average tree age of 15-16 years, ensuring long-term productivity. SSMS currently operates eight palm oil mills (540 TPH capacity) and 180 TPD kernel crushing plant with biogas facility. In 2024, SSMS produced nearly 1.707k mt of FFB, supplemented by 538k mt from independent suppliers, yielding 505k mt of CPO with zero waste. Following its 2023 acquisition of CBUT with its downstream operations, SSMS has become an integrated CPO company, paving the way for refining into higher-value palm oil derivatives.

Capitalizing on elevated CPO price and production improvement. SSMS has a built-in agility in its business model allowing for increased exports to India, Vietnam, and other key markets when global CPO prices rise and on the flip side, CBUT’s refineries currently make it possible for the group to focus on downstream redirection efforts as overseas prices fall. With YTD average CPO prices of MYR 4,583/mt (+18.3% YoY), SSMS targets 2025F FFB production of 1.9 Mt (+0.7% YoY) and yield of 23.7 tons/ha (+16bps YoY). Assuming processing rate of 2.3 Mt FFB (64% utilization) with 25% OER (+250bps YoY), SSMS is set to produce 570k tons of CPO (+12.9% YoY), c.70% allocated for exports. Aside from ‘raw’ CPO, SSMS will continue down-stream operations, with 2025 Olein volume target of 271k tons (-0.6% YoY) and Stearin of 73k tons, leveraging supply chain to boost margins and reduce third-party reliance.

Robust >30% 2025F EPS Growth & 24% dividend yield; BUY with TP of IDR 2,500. Supported by 2025F FFB yield of 23.7 tons/ha, 25% OER, and higher CPO ASP of IDR 15,225/kg, we forecast SSMS to book 2025F revenue of IDR 11.2tn (+6.2% YoY) with IDR 2.7tn EBITDA (+17.8% YoY), driven by margin expansions from lower raw material purchases amid strong CPO production. On the bottom line, SSMS’s net profit is projected to reach IDR 1.2tn (+38.3% YoY), aided by reduced interest costs from deleveraging. With its strong cash position, SSMS is expected to deliver 50% DPR in 2025F, translating to 23.9% dividend yield. Therefore, we re-initiate coverage with BUY rating and DCF-based TP of IDR 2,500, implying 20.6x P/E 2025F and 55.3% upside potential. Upside risk to our call is the government’s B40 implementation while downside risks are lower CPO prices and potential operational delays.