CIMB Sampoerna Agro Result note - Disappointing quarter

(SGRO IJ / SGRO.JK, UNDERPERFORM - Downgraded, Rp1,680 - Tgt. Rp1,540, Plantations)

SGRO's 1Q09 earnings form only 5% of our full-year forecast and consensus, due to poorer-than-expected production in 1Q09 (-64% yoy). Management blamed this on weather patters. To account for the lower production, we have reduced our EPS estimates by 21-27% for FY09-11. Downgrade to UNDERPERFORM from Outperform, with a lower target price of 1,540 (from Rp2,100), still based on 9x CY10 earnings. Lack of disclosure is a concern.