Analyst Hadi Susilo lowers his earnings forecasts for Aneka Kimia Raya (AKRA IJ) by 38% and 44% for 2009-10 respectively. These cuts are made merely to account for more conservative assumptions. TP is Rp1,000, or 22% upside.
The company has quality business portfolio: sorbitol manufacturing, petroleum, and chemical distribution + logistic business (contribution to profits: 56%, 33%, and 11% respectively). The key growth drivers are petroleum distribution business. The potential is massive. Total market size for unsubsidized fuel is 25mn KL. And AKRA pretty much has no competitor in this area. We expect AKRA to do 831k KL sales volumes this year. Certainly growth potential is there.
The other interesting business potential is the tank terminal business (to be completed in 4Q09). This is a 40% gross margin business. AKRA has 51% stake in this business (the rest owned by Vopak). Initial installed capacity is 250k KL and total investment is US$86mn. Capacity expansion will be some 40% cheaper, according to our analyst.
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