CIMB Astra Agro Lestari Result note - Results in line

(AALI IJ / ALII.JK, NEUTRAL - Downgraded, Rp22,000 - Tgt. Rp25,500, Plantations)

We downgrade Astra Agro to NEUTRAL from Outperform. Despite a higher target price of Rp25,500 (based on 18x CY11 earnings) from our end-2009 target price of Rp21,700 (based on 15x CY10 earnings) as we cut our earnings estimates by 1-7% on stronger currency assumptions, we downgrade the stock on valuation grounds. 9M09 earnings are only 62% and 65% of our full-year forecast and consensus estimate respectively, but we see upside from higher CPO production and sales in 4Q09, as well as firmer prices. AALI's production is on the rise and costs are falling, both of which should translate into more sustainable margins. Together with rising CPO prices going into 2010, in line with our anticipation of higher oil prices, we are attaching a higher P/E target for AALI of 18x, similar to Malaysian big peers.