Mandiri Sekuritas Astra Agro Lestari: 1Q10 net income below our estimate and consensus (AALI, Rp23,250, Buy, TP: Rp29,000/share)

􀂄 AALI posted 1Q10 revenues of Rp1.63tn (16.0%yoy, -16.7%qoq). This translates to net income of Rp272bn (+24.9%yoy, -34.1%qoq)

􀂄 Revenues decreased by 34.1%qoq due to a decrease in CPO sales volume by 22.5% qoq from 288,289 ton in 4Q09 to 223,308 ton in 1Q10 and a decrease in kernel sales volume by 32.7% qoq, which partially offset by increase in CPO sales price by 9.3% from Rp5,985/kg in 4Q09 to Rp6,544/kg in 1Q10.

􀂄 1Q10 CPO sales volume of 223,308 ton represents 20.4% of our FY10E CPO sales volume. In the last 3 years, average 1Q sales volume represented 23.1% of full year sales volume.

􀂄 Our concern is on cost pressure which caused profit margin squeeze from 4Q09 to 1Q10 when CPO sales price increased in the same period.

􀂄 Currently the counter trades at PER10-11F of 14.7-13.2x. We are in process of reviewing our assumptions with possible downgrade.

NISP Astra Agro Lestari posts higher selling price (AALI, Rp23,200)

• AAL managed to book a higher sales volume of Rp6,544/kg in 1Q10, 19.1% YoY higher from Rp5,494/kg in 1Q09 period. This higher sales price managed to balance the impact from lower sales volume of 223,308 tons (-1.18% YoY) and helped the company post 17.74% YoY increase in its revenue to Rp1.5tn in 1Q10 as compared to Rp1.2tn a year earlier.

• The company also managed to post higher sales price on kernel where AAL recorded a selling price of Rp3,083/kg or increased by 46.2% YoY.

• Despite the company has not released its full financial statement, these figures indicates that AALI’s revenue in 1Q10 may come below the market expectation as the consensus foresees a Rp2.0tn of revenue for 1Q10F.

• AALI is trading at 2010F consensus PER of 14.9x and EV/EBITDA of 9.7x.