Maintain Buy; raise TP to Rp16,250 — We still view AALI as fundamentally attractive. Key reasons: a) largest Indo plantation in terms of market cap, b) favorable dividend yield of 6%, c) highest ROE%, d) net cash position (zero debt) and e) simplicity of business structure, offering transparency and stability. We maintain our Buy (1H) rating and raise our target price to Rp16,250 from Rp14,150 following our estimates adjustments.
Adjusting estimates — Factoring in recent FY08 results and to better reflect current market conditions, we adjust our forex and volume estimates (Fig. 1). Overall, this led to a 5-47% upward revision in our '09-'11 earning estimates.
FY2008 in a snapshot — FY08 sales rose 36.9% YoY on the back of a +18.2% YoY CPO price of Rp7,134/kg, +13.2% YoY CPO sales vol. of 970.7k tons and +6.6% CPO prod'n vol. of 981.5k tons. As a pure CPO play, this flows straight to the bottom line. Coupled with the Rp403.3bn gain from the disposed
overlapping hectarage area, net profit surged 33.3% YoY to Rp2,631bn. (102% Citi's FY08E; 103% consensus.)
4Q08 in a snapshot — 4Q08 sales dropped -28.6% YoY and -20.5% following the CPO price drop during the period. Fortunately, the Rp403.3bn gain from disposed asset booked in 4Q08 cushioned the bottom line. Overall, net profits only dropped 5.9% QoQ. more...
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