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.
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