[BRIGHT INFO] Weekly Outlook "Palm Oil"

General
JCI Closed lower last week amid lack of positive sentiment on market
CDS still wide and IDR looks under pressure at 12,050
Lower IDR puts companies with USD debt exposure and raw material import under pressure. Lower
IDR could reduce EPS. Lower IDR negative for INDF, UNSP, KLBF (and Pharmaceutical sector), PGAS.
Oil reached $45 a barrel and CPO price looks higher above RM2,000 a ton

Our Focus
AALI
Stockpiles of Palm Oil will decline in February as palm is producing less. Palm oil reserves may have dropped to as low as 1.7 million tons in February from 1.83 million tons in the previous month. Outputs will also likely fall by as much as 10 per cent from 1.3 million tons produced in January. (Malaysian Base).
Total Exports Jan’08 – Dec’08 was 15,409,628 Ton Up 34.60%, Export Jan’08 vs Jan’09 was 1,037,468 vs 1,345,093 Up 29.65 %. (Malaysian Base).
Malaysian sales to China in January-February totaled 530,350 tons, up 43 percent from a year ago, while exports to India more than tripled to 292,790 tons in the period, according to Societe Generale de Surveillance. China said last month it would import a record 5.3 million tons of palm oil this year (Malaysian Base).
Oil palms in Malaysia and Indonesia, the top producers, are stressed from record output in 2008, “weakening productivity.”
With urea prices down 50-60% from their peaks in 3QFY08, CPO production is at 246k tons in 4Q08 vs. 241k in 3Q08 and CPO price has bounce from the low in 4Q08, we expect a recovery in earnings in 1Q09 for QoQ base.
We believe Ebit in 1Q09 was little higher qoq due to higher CPO price around Rp7,100/kg in 1Q09 vs. Rp4,836/kg in 4Q08.
Even sold 7k hectares of its rubber and palm oil estates to Adaro but AALI still keep the right to harvest until 2012.
AALI will getting FX gain on AALI’s USD cash balances.
We believe CPO shares will improve for medium term investment. We agree that 1Q’09 report will be worse than 1Q’08 but we believe that it will be better than 4Q’08.
We are thinking positively on CPO shares, assuming average price for CPO’09 at $650 with efficient operating cost caused by lower fuel price. We believe financial report will improve QoQ in 2009.
We recommend to collect CPO shares, our Top Pick is Astra Agro Lestari and also we like Bakrie Sumatera Plantation.
[Just Personal Opinion]
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DISCLAIMER: This report is issued by [BRIGHT INFO]. Although the contents of this document may represent the opinion of [BRIGHT INFO]. We cannot guarantee its accuracy and completeness.