Astra Agro Lestari (AALI) – Maintain HOLD
Price: Rp21,700 - Target Price: Rp24,500
Good FY10 Results
- 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.
- Earnings up by 21.5% YoY to Rp2,016 bn in FY10, with top line grew by 19.1% YoY to Rp8,843 bn.
- 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.
- 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.
- 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