DBS Astra Agro Lestari: Fully Valued; Rp24,400; TP Rp20,425; AALI IJ

Feb10 CPO sales volume dropped by 27.4% m-o-m
Astra Agro Lestari (AALI) reported a 27.4% m-o-m decline in Feb10 CPO sales volume to 66,060 MT, from 90,954 MT in Jan10. Decline came from lower production, which fell by 20.3% m-o-m to 62,611 MT – on low production season, aggravated by a drop in smallholder yields. Local and export sales volumes accounted for 88.6% and 11.4%, respectively after falling by 25.7% and 38.4% m-o-m, respectively. Average selling prices nevertheless rose by 1.8% m-o-m to Rp6,523/kg, in line with international price movements.

For 2M10, AALI’s CPO sales volume rose by 2.7% y-o-y to 157,014 MT, representing 15% of our full-year forecast of 1,056,235 MT. We expect FY10F CPO production growth to decelerate to 2.5% from 10.3% last year, mainly due to lower plasma contribution and aging tree profile. Our Fully Valued call and Rp20,425 TP are maintained.