Net profits were slightly better than our expectations, making up 50% of our fullyear forecast. Bottom line is up 10.4% QoQ and 49.1% YoY.
Sales are up 1.1% QoQ and 3.4% YoY, making up 43.4% of our FY forecast. This is broadly in line with our expectations. 1H sales are usually making up 42-45% of the FY.
Gross margins expanded from 20.5% in 1Q10 to 23.1% in 2Q10 due to weak corn prices at the beginning of this year. Up until now, selling prices are maintained, and strong demand from consumers is still providing solid support. Hence, gross profits grew 14.1% QoQ and 26.3% YoY.
Operating profits are up 16.2% QoQ and 37.2% YoY. Operating expenses were down 1.6% YoY following the company’s cost efficiency program.
Conclusion: The stock is trading at 8.6x 2011CL earnings and 6.0x EV/EBITDA while returning 41% ROE. We maintain our BUY recommendation on the stock, with a target price of Rp6,600, implying 28% upside from the current prices.
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