NISP London Sumatra reduces new planting to 3,500-4,000ha (LSIP, Rp9,150)

London Sumatra reveals due to environmental factors, it has reduced its new
planting target from 5,000 ha to only 3,500-4,000ha. The company will utilize
Rp150.0bn of capex for that action.

The company’s first half financials is under review and expected to be published
in the third week of August.

LSIP is trading at 2010F PER of 13.3x and EV/EBITDA of 8.3x.

Mansek Sampoerna Agro:1H10 results inline with ours and consensus estimates (SGRO,Rp 2,475,BUY,TP:Rp3,150)

SGRO reported 1H10 net profit of Rp131bn (+37.8%yoy),represented 34.4%of our FY forecast and 32.9%of consensus estimates.Please note that 1H results in 2007 and 2009 accounted for 31-34%of FY results,thus led to this year ’s 1H result was basically in line with our expectation.

The company ’s sales grew by 33.2%yoy,higher than in 1Q10 of 46.8%qoq,while operating margin reached 25.8%,an improvement from 21.2%in 1Q10 (vs our target for FY10 of 24.7%)

At current price,SGRO is trading at 2011F PER of 10.1x.We maintain our buy recommendation on the counter.

NISP London Sumatera to spend Rp500.0bn of capex this year (LSIP, Rp9,150)

• London Sumatera (LSIP) has prepared Rp500.0bn capex for this year. The company will use the budgeted capex to increase CPO production capacity from 405 tons/hour to 425 tons/hour and for a new planting program this year. 60% of the amount will be financed from internal cash with the remaining to be financed from bank loans.

• The company will also disburse 40% of its 2009 net profit as cash dividend which translates into Rp209/share (2.3% yield). The cum date will be on 26 May 2010, while the payment date will be on 5 June 2010.

• LSIP is trading at 2010F consensus PER of 13.3x and EV/EBITDA of 8.2x.