CIMB Ramayana Lestari Result note - As expected, an awful start to the year

(RALS IJ / RALS.JK, OUTPERFORM - Maintained, Rp485 - Tgt. Rp560, Consumer)

Ramayana's 1Q09 net profit was below our forecast and consensus by 20-25% as sales contracted 6.4% yoy on -8.9% SSG, resulting in EBITDA margins contracting by 2.4% pts yoy. A glimmer of hope has been observed with sales in commodity areas showing improvement. Rising CPO prices and subsiding inflation also bode well for the sales outlook. Given the highly cyclical nature of Ramayana's sales and the fact that 1Q normally makes up just 12% of full-year sales, a pick-up in the festive months (late 3Q this year) could more than neutralise the 1Q shortfall. Maintain forecasts and DCF-based (WACC 15.8%) target price of Rp560, implying 10.6x and 8x CY09-10 earnings.