Mandiri Sekuritas London Sumatra: 1Q10 net income was below our estimate and consensus (LSIP, Rp9,650, Buy, TP: Rp10,500)

􀂄 LSIP posted 1Q10 revenues of Rp680bn (10.1%yoy, -26.8%qoq). This translates to net income of Rp168bn (+62.8%yoy, - 23.0%qoq)
􀂄 Although CPO and PK sales volume decreased by 13.5% and 16.2% yoy, respectively, revenue increased by 10.1%yoy mainly due to higher ASP of rubber and higher sales volume of oil palm seeds.
􀂄 CPO sales volume decreased because CPO production decreased by 6.1% yoy and logistical issues relating to higher rainfall in South Sumatera.
􀂄 1Q10 gross margin improved due to higher ASP of rubber in 1Q10 and higher sales volume of oil palm seeds.
􀂄 1Q10 CPO sales volume of 69,265 ton represents 16.7% of our FY10E CPO sales volume. In the last 2 years, average 1Q sales volume represented 22.7% of full year sales volume.
􀂄 We will re-visit our forecast. Currently, we retain our buy call with a TP of 10,500. The counter trades at PER10-11F of 14.2- 12.2x.