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Tuesday, March 1, 2011

Astra Agro Lestari (AALI)

by Samuel Sekuritas

Good FY10 Results

Highlights:

• AALI’s earnings up by 21.5% YoY to Rp2,016 bn in FY10, with top line grew by 19.1% YoY
to Rp8,843 bn.
• However gross margin slightly down to 40.7% (from 41.8%) and operating margin
dropped to 33.9% (from 35.1%) due to higher 3rd party purchased.
• CPO production grew by 2.8% YoY to 1.1 mn ton or 3% ahead our estimation meanwhile
FFB yield declined to 20.2 ton/ha (from 21.8 ton/ha) due to unfavorable weather. CPO ER
also dropped to 22.9% (from 23.1%).


Comments:

• AALI’s FY10 results were ahead our forecast, but inline with the consensus, largely driven
by the surge in CPO prices and higher than expected CPO sales volume.
• Although facing unfavorable weather, AALI managed to sell 1.1 mn ton CPO (+5.2% YoY)
during 2010, while ASP increased by 12.6% to Rp7,027/kg or 10% above our forecast.
• Balance sheet looks nice, with net cash position of Rp1,240 bn or Rp788/share. Hence we
believe AALI won’t find any difficulties to finance new planted using internal cash.
• We expect AALI’s CPO output to grow slightly by 3.5% YoY to 1.15 mn tons in FY11 given
high aging plantation profile (average age about 14 years) and bad weather condition. On
the other hand, CPO price is expected to remain favorable due to soaring oil price and tight
supply. Our CPO price assumption is US$950/ton this year.
• According to Oil World, world CPO production slightly increased by 1% to 45 mn ton in
FY10, with Indonesia production grew by 3.8% to 21.8 mn ton whilst Malaysia decreased
by 3.3% to 16.9 mn ton. This year, CPO production is expected to grow by around 1%.

Action & Recommendation:

• We maintain HOLD recommendation on AALI with price target Rp24,500/share. Our target
price for AALI is based on 16.5x PER’11. Short term price catalyst will be from dividend
payment, expected yield 2.5%-3.6% assuming payout ratio 40%-60%. Maintain HOLD

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