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.

Mandiri Sekuritas Astra Agro Lestari: 1Q10 production data, inline with our forecast (AALI, Rp24,400, Buy, TP: Rp29,000)

􀂄 AALI’s reported 1Q10 CPO production of 218kton (-3.2%yoy) due to lower FFB production of 5.1%yoy. Production in Sumatera and Sulawesi declined, at the same time, Kalimantan area continued to show production growth due to younger plantation profile. Despite of YoY production decline, CPO and FFB production grew on MoM basis at 25% and 24%, respectively. 1Q10 production data represented 20% of our FY10F production volume.
We consider it inline with our forecast as 2H production has been usually bigger than that in 1H.

􀂄 We still have a Buy recommendation on AALI which currently is trading at
PER10-11F of 15.4-13.9x.