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Wednesday, May 4, 2011

AKR Corporindo.Tbk - Excellent 1Q11 result

by Samuel Securities

 AKRA recorded 79% revenue growth and significant net profit growth as much as 2480% YoY in FY10. Net revenue was recorded at Rp4.35 trillion and net income was reported at Rp1.812 trillion.

Comments:

 The company’s 1Q11 net revenue was above our estimate and accounted for 31.5% from our projection. 1Q11 significant surge in net income was attributable to the gain on sale of SOBI, thus core profit for the quarter will be Rp128 billion and accounted for 33.8% from our projection, also above from our estimate.

 During 1Q11, significant surge on net revenue was contributed from increased sales of petroleum products, such as High Speed diesel and other refined products mainly to the mining industry, and petroleum contributed 80% to the total revenue with 149% YoY growth in 1Q11 petroleum sales.

 Basic chemicals and Logistics divisions also performed well with 31% and 83% YoY growth in sales respectively due to increased demand and logistic services in Indonesia and China. The Manufacturing division also performed well without SOBI. Excluding SOBI, the Manufacturing division recorded 53% YoY growth.

 The company also has strong balance sheet with net cash position of Rp989 billion that can be used to finance further growth. Going forward, we believe the company will excel in the logistics and distribution segment as petroleum distribution has shown promising prospect where 1Q11 volume has accounted for 28% of AKRA’s FY11 target sales volume. Moreover, things are also looking good for the coal business as coal terminals under construction in Buntok Baru Port and Telok Timbau Port will serve as important hubs for transporting coal from Muara Tewe to Tabaneo transshipment port via river.

Action & Recommendation:

 Currently AKRA is trading at 15.6x–14.9x PE’11F–12F and we maintain our recommendation on the stock and target price which offers 13% upside. BUY

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