OSK ASTRA AGRO LESTARI (TP IDR21,820– NEUTRAL) 1QFY10 Results Review: A Temporary Deficit

Astra Agro Lestari (AALI)’s 1Q results were below expectation as production took a breather. However, we are not overly concerned as production should rebound in the subsequent quarters. While we like the company, we do not find its stock valuation compelling. In terms of EV per hectare, AALI is among the most expensive of the upstream-heavy players at USD18.2k per planted hectare compared to USD15.2k for Golden Agri, USD12.7k for Indo Agri, USD11.9k for First Resources and USD9.9k for Kencana Agri, all of which offer better value. AALI’s stock price has been flat since we initiated coverage in February. We do not see any stock price catalyst on the horizon.