by Batavia Prosperindo Securities : AALI
· Above the monthly average
In 9M11, AALI produced 3,430,102 tons of Fresh Fruit Bunch (FFB), increased 13.5% y-o-y. In September 2011 alone, AALI booked the highest CPO production of 451,693 tons, above the average CPO production in 2011 of 381,122 tons. Total CPO production until end of September 2011 was 930,827 tons, increased 19.8% y-o-y. AALI recorded 9M11 CPO sales volume of 889,917 tons (+16.8% y-o-y), which 95.5% of it was sold to domestic market.
AALI booked Rp7.94 trillions of net sales, up by 38.7% y-o-y, due to increasing sales volume and Average Selling Price (ASP) of CPO products. ASP of CPO in 9M11 increased to Rp7,776 per kg (+16.5% y-o-y) while ASP for CPO derivative product such as Palm Kernel Oil (PKO) and Palm Kernel Expeller (PKE), are also increased by 54.8% and 100.2% respectively
· Additional 2 palm oil mills
AALI added 2 more palm oil mills during 9M11. Average palm oil mills utilization rates are 70%-71%, with the highest utilization rate is on Sumatra palm oil mills which is 80%. Next year, AALI will add two more palm oil mills in Sulawesi and Kalimantan with capacity of 45 tons FFB per hour for each mill.
AALI will allocate Rp1.7 trillion of capital expenditure in 2012 from internal. Capex will be used to add new planting area (in South Kalimantan, West Kalimantan and South Kalimantan), replant (3,000 ha) and build 2 palm oil mills.
· “HOLD” on target price Rp23,300
We see in next year, AALI CPO production and sales will not increase significantly due to limited new planting area. We predict production and sales growth will be the same as previous.
We expects commodity prices in the near future will not be in increasing trend, due to uncertainty in Europe and impact of tightening policy in China. We still assume average price of CPO next year is USD 1,050 per ton. Our DCF valuation model results in target price of Rp23,300, or at 12.4X FY12F PE. We recommend HOLD with 6.9% potential upside from the closing price (12/12) at Rp21,800