Production costs may trouble Bumitama Agri in 2017

But it will be offset by higher yields.

Bumitama Agri's good profit standing, rising 31% to $25.3m in 3Q16, may be badgered with rising cost of production next year, UOB KayHian analyst Ooi Mong Huey said.

Despite strong growth forecast for the group in 2017, Bumitama may see its cost of production rising for two main reasons.

"The increase in production costs will come mainly from the rise in minimum wage with the government having announced that minimum wages be increased by 8% effective in January 17," the analyst cited.

Ooi furthered that Bumitama will have to take more from its pocket as it face increasing fertiliser costs.

"However, this will partly be offset by higher production, which will bring down per unit cost of
production," the analyst noted.

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