Kim Eng BW Plantation (BWPT IJ): BUY - Valuation gap to narrow

We initiate coverage on BW Plantation with a BUY recommendation and a TP of Rp840. Based on EV/planted nucleus area, we believe BW is the cheapest Indonesia’s plantation play, it is valued at 34% discount compared with the peer sector of Rp119m/ha. With 31% earnings CAGR over FY09-14E, the stock appears attractive at 10.5x FY11E PER. Owing to high productivity and a young estate profile, we expect the valuation gap to narrow vs. the peer average of 15x PER.