CIMB Maintained London Sumatra Running on one driver

• In line. FY08 net profit was Rp927bn, up 65% yoy, in line with our forecast of
Rp900bn but above consensus by 6%. Topline grew 31% yoy, while EBITDA
margins climbed to 38.7% in FY08 from 37.7% in FY07.

• CPO division buffered by forward contracts and higher sales volume. CPO
operating profit was down 38% qoq in 4Q08, beating AALI’s 60% qoq contraction.
This was made possible by one-time forward contracts of US$909/tonne in 4Q08,
much higher than prevailing prices, comprising 33% of sales volume in 4Q08.
Lonsum also sold 31% more volume in 4Q08 with the help of seasonally higher
CPO production in 4Q08. FY09 forward contracts are less than 5% of total sales
volume, which would only give a small boost to Lonsum’s CPO division.

• Poor rubber and seedling performances in 4Q08. 4Q08 operating margin for
its rubber and seedling divisions was down to 10% and 9% respectively, from
3Q08’s 34% and 86%. We ascribe this to a 50% decline in rubber prices in 4Q08
to US$1.60/kg and a 52% qoq sales volume decline for seedlings. In the next few
quarters, we expect these two divisions to remain under the weather, as no
catalysts are in sight. Rubber prices should continue to be dogged by the poor
global economy and weak crude oil prices, which make synthetic rubber more
competitive. YTD, rubber price has only averaged US$1.40/kg. We also expect
seedling sales volume to remain weak as planters become conservative with
greenfield plantings.

• Maintain UNDERPERFORM. We maintain our target price of Rp3,100, still based
on 8x CY10 earnings. We also introduce FY11 forecasts. We see no catalysts in
the short term for its other two divisions, rubber and seedlings, which contributed
26% to Lonsum’s operating profit in FY08.