Improved growth profile
Palm plantings figure in 2008 confirmed our positive view on Sampoerna Agro (SGRO). With new palm plantings of 12k during 2008, we expect the company to be able to reach its targeted plantation area of 140k ha by 2012. SGRO also achieved better yield and extraction rate for FY08. All these factors, in our view, will translate into better CPO production growth going forward (5.9% CAGR FY08-FY12F). Additionally, without forex debt, SGRO could survive current! rupiah d epreciation better than other companies. Reiterate our Buy call with TP maintained at Rp1,400/share.
Retain Buy rating. We keep our earnings forecasts for SGRO intact as our CPO price forecasts (US$550-600/ton for FY09F-10F) are unchanged. We like the stock for its potential CPO production growth and less exposure to forex debt. Our TP of Rp1,400/share was derived from DCF-based valuation (WACC: 13.6%, TG: 3%). Maintain Buy.
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