Mandiri Sekuritas Astra Agro Lestari: 1Q10 net income below our estimate and consensus (AALI, Rp23,250, Buy, TP: Rp29,000/share)

􀂄 AALI posted 1Q10 revenues of Rp1.63tn (16.0%yoy, -16.7%qoq). This translates to net income of Rp272bn (+24.9%yoy, -34.1%qoq)

􀂄 Revenues decreased by 34.1%qoq due to a decrease in CPO sales volume by 22.5% qoq from 288,289 ton in 4Q09 to 223,308 ton in 1Q10 and a decrease in kernel sales volume by 32.7% qoq, which partially offset by increase in CPO sales price by 9.3% from Rp5,985/kg in 4Q09 to Rp6,544/kg in 1Q10.

􀂄 1Q10 CPO sales volume of 223,308 ton represents 20.4% of our FY10E CPO sales volume. In the last 3 years, average 1Q sales volume represented 23.1% of full year sales volume.

􀂄 Our concern is on cost pressure which caused profit margin squeeze from 4Q09 to 1Q10 when CPO sales price increased in the same period.

􀂄 Currently the counter trades at PER10-11F of 14.7-13.2x. We are in process of reviewing our assumptions with possible downgrade.