CIMB AALI Quick takes - Price support from weak production

(AALI IJ / ALII.JK, OUTPERFORM - Maintained, Rp24,650 - Tgt. Rp28,700, Plantations)

Reiterate Outperform and target price of Rp28,700 for AALI, based on 18x CY11 P/E. Weak production, down 5-6% year-to-February, is not specific to AALI but applies to most plantation companies we spoke to. Under-fertilising and poor weather appear to be the chief culprits. Malaysian peers also cite production pressure. The weather remains the wildcard, with leading indicators in the SOI suggesting a strong El Nino developing. No change in our earnings estimates for now, though supply risks are increasingly a clear and present threat. CPO price upside is a near-term share-price catalyst, in our view. AALI remains one of the largest and purest CPO planters in Indonesia .