CLSA Astra Agro (AALI IJ) 1Q2010 results

Astra Agro net profit in 1Q10 up 25% yoy to Rp272bn, but still 34% lower than the strong 4Q09 result. The result is at lower end of our estimate and market consensus. Reported earnings is only 11% of our (and consensus) full year estimate vs. 13% in 2009.

Revenues was up 16% yoy but down 17% qoq. Sales volume down 1.2% yoy. Most importantly, FFB production from its own estates was down 2% yoy and 28% lower qoq. As production costs is fixed on per hectare basis, lower production/yield increases unit production costs.
The selling price of Rp6,544/kg in 1Q10 is 19% higher than 1Q09 and 4% higher than 4Q09. Strong rupiah has mitigated some of the gain in international CPO price.
Production costs is creeping higherwith total Cogs excluding FFB purchase up by 5.8% yoy and G&A costs excluding taxes up 27.6% yoy.
There is Rp19bn FX loss from US$ holding and Rp21bn other charges. Excluding these, net profit will be 13% of full year estimate, similar to last year.
We continue feel Astra Agro (AALI IJ - Rp23,250 - OPF) is pricey and prefers London Sumatra.