CIMB Lonsum Sumatra

According to a recent press release by Indofood Agri, Lonsum reported EBITDA of Rp1,488bn in FY08, above our estimate and consensus. Reasons were the monetising of forward sales in 4Q08 and less fertiliser application. Due to these reasons, Lonsum's EBITDA margin in 4Q08 was 28% seemingly better than AALI's EBITDA margin of 23%. However, we expect EBITDA margin to normalise to 25% in FY09. We revised our earnings estimates by 13-15% for FY08-09 as we take into account the better 4Q08 and forward sales. Maintain UNDERPERFORM with an unchanged target price of Rp3,100, still based on 8x CY10 earnings.