Mandiri Sekuritas Sampoerna Agro: 1Q10 net income grew by 219.4% YoY (SGRO, Rp2,700, NEUTRAL, TP: Rp2,900)

�� SGRO posted 1Q10 revenues of Rp302bn (93.7%yoy, -52.0%qoq). This translates to net income of Rp43bn (+219.4%yoy, - 44.9%qoq)

�� Revenues decreased by 52.0%qoq mainly due to a decrease in CPO sales volume by 59.5% qoq, which partially offset by an increase in CPO sales price by 11.8%. Revenues increased by 93.7%yoy mainly due to an increase in CPO sales volume by 53.3% yoy and CPO ASP by 23.6% yoy.

�� CPO sales volume decreased by 59.5% qoq due to a decrease in FFB production by 49.4%qoq which translate to a decrease in CPO production by 51.3% qoq.

�� 1Q10 CPO production volume of 190,821 ton represents 13.7% of our FY10E CPO production volume due to 1Q10 FFB production volume represents only 14.9% of our FY10E FFB production volume. In the last 4 years, 1Q FFB production volume represented 10.3%-23.1% of full year FFB production volume.

�� Considering historical production pattern and due to the management of SGRO still confident in achieving its CPO production target, we will maintain our FY2010E CPO production volume.

􀂄 Currently the counter trade at PER10-11F of 13.0-10.9x. We maintain our Neutral Recommendation with TP of Rp2,900.