CLSA AKRA 1Q10 results

AKRA reported 1Q10 results:
• Net profit 1Q10 reached Rp70.2bn, up 61% YoY but -15% QoQ. This is 19% of our FY10E Rp370bn.
• The company booked forex gain of Rp19bn in 1Q10, vs (-)8.8bn in 1Q09; hence stripping out forex, net profit 1Q10 was Rp56bn, up 12% YoY, and flat QoQ.
• Revenue in 1Q10 reached Rp2.43tn, up 33% YoY, but -8% QoQ. This is 21% of our FY10E Rp11.5tn.
• GP margin expanded to 9.3% in 1Q10, from a low 8.8% in 4Q09, although still not as strong as previous 1Q08 to 3Q09 (average 11.3%). GP margin on AKRA excluding Sorini expanded to 6.6% in 1Q10 from 5.6% in 4Q09.
• Petroleum sales volume was 258,503kL in 1Q10, increased 36% YoY, but declined from previous quarter of 320,070kL. Company said a couple of customers in Kalimantan reduced volume intake in 1Q10, but they will buy more in 2Q10. Company still believe can reach target of 1.3m kL in 2010. (our current estimate is 1.2m kL).
• Sorini reported an expected weak 1Q10 results:
o Revenue 1Q10 of Rp408bn rose 7% YoY, 13% QoQ.
o Although sales vol increased 24% YoY, but price in Rp dropped 14% (mainly caused by rupiah appreciation of 21% in 1Q10 vs 1Q09). Rp appreciation impacted Sorini given they do 46% export. For instance, sorbitol price in 1Q10 was US$555/t (increase by 4% YoY), but in Rp terms, it was a 18% decline YoY.
o Gross profit 1Q10 reached Rp91bn, dropped 28% YoY, and (-)13% QoQ. Higher cost of raw material (starch increased by 19% QoQ) and time-lag in passing the higher cost to buyers caused GP margin to contract further in 1Q10 to 22.3%, from 29% in 4Q09. 22.3% is the lowest margin compared to past 8 quarters.
o Net Profit 1Q10 = Rp30bn, declined by 26% YoY, but flat QoQ.
o In US$ terms, EBITDA 1Q10 rose 5% YoY. (1Q10=US$7.5m, vs 1Q09=US$7.1m)
• Core earnings (excl forex gain/loss and other income/charges):
􀂃 On AKRA, core earnings was flat QoQ and up 4% YoY
􀂃 On SOBI, core earnings (-) 36% QoQ and (-) 49% YoY
􀂃 On AKRA excl SOBI, core earnings up 32% QoQ and 79% YoY