CIMB 1QFY10 Results – Astra Agro Lestari

Higher costs
Maintain Outperform on AALI. 1Q10 results were 25-30% below our forecast and consensus estimate largely on higher costs, stemming from higher COGS and G&A. The tax rate, still close to 30% (vs. an expected fall to 25%) was the other culprit. We cut our earnings estimates by 3-7% for FY10-12 to factor in a higher cost base for FY10. Consequently, our target price drops from Rp30,240 to Rp29,200, still based on 18x CY11 earnings. Maintain Outperform as we still see key catalysts from improving production and continuing robust CPO prices.