PT Provident Agro Tbk. (ticker code: PALM) is a publicly listed palm plantation company with 11 palm oil estates
in Sumatera, Kalimantan, and Sulawesi. Founded in 2006, the company is cultivating palm trees of varying ages in over 46,000 hectares of land. It produced a total of 102,176 tons of CPO, 359,692 tons of fresh fruit bunch (FFB) and 19,829 tons of palm kernel in 2014 compared to 81,222 tons, 259,559 tons and 15,720 tons, respectively, in 2013.
Roughly half of the company’s palm trees are still in their early stage of growth and are yet to enter their most productive years. Palm trees bear fruits starting from on average their fifth or sixth year. However, these early fruits still yield low amounts of oil – referred to in the industry as the oil extraction rate or OER. As trees mature over time, the fruits will grow bigger and consequently yield higher OER. On average, palm trees are at their most productive stage between the 8th and 17th year.
Provident Agro enjoys a relatively young plant age profile, in which the average age of the company’s palm trees is around seven years as of year-end 2014. This provides the company with tremendous growth opportunities within the next decade as the trees mature to peak production age.