CIMB London Sumatra Result note - Rubber boost

(LSIP IJ / LSIP.JK, OUTPERFORM - Maintained, Rp9,650 - Tgt. Rp12,150, Plantations)

Slightly below; but maintain Outperform. 1Q10 core net profit grew 85% yoy to Rp173bn, just shy of consensus and our expectations. Disappointing palm-related sales were more than offset by strong rubber revenue, while better gross margins offset by higher opex and interest expense caused core profit to be 2% below consensus and our estimates. Though CPO sales constituted only 17% of our full-year estimate, we are maintaining our operational numbers, while adjusting for higher interest expense. This reduces our FY10-12 earnings estimates by 1-2%. Still using 15x CY11 P/E, our target price has been trimmed to Rp12,150 from Rp12,270. Near term, surging rubber prices should remain a key stock driver, while palm oil production growth, continuing efficiency improvements and CPO prices are likely to provide mid-term catalysts.