Batavia Stock Focus
6 December 2012
London Sumatra
Yasmin Soulisa
yasmin@bps.co.id
62-21 5207374
Price Pressure
• Decline in revenue pressured by lower ASP
London Sumatra in 9M 2012, posted sales of Rp3.37 trillion, a 4% decline
compared to same period last year, which was Rp3.52 trillion. The pressure
came from sharp decline in commodity prices, mainly palm products and
rubber. Lonsum selling price for its palm products; CPO and Palm Kernel
(PK), had decreased 1% and 27%, respectively. While the company's rubber
price down 26% compared to 9M 2011. The seeds price was relatively
better, went up 20% yoy. Net income shrank 9% to Rp949,86 million from
Rp1,31 billion last year.
• Production relatively flat
The company faced early wintering this year. Fresh Fruit Bunch (FFB)
processed reached 1.43 million tons, rose 4% from 1,38 million tons during
the first 9 month of 2011. CPO and PK production in 9M12 increased 1.3%
and 2.4% from the same period last year, reached 322,270 tons and 77,919
tons, respectively. Nucleus FFB yield for the period declined from 13.4
tons/ha to 12.8 tons/ha. Oil extraction rate (OER) and Kernel extraction rate
(KER) stood at 22.5% and 5.4%. Meanwhile, planting activity up to 9M12
was 1,665 ha, of which 1,586 ha for oil palm new planting and the remaining
for rubber and oil palm replanting. New planting were expected around
3,500 ha to 4,000 ha this year.
Stock Data
Price (Rp)
Target (Rp)
Recommendation
52-weeks range (Rp)
Market Capitalization (Rp bn)
Outstanding shares (mn shares)
Daily average volume ('000 shares)
Daily average value (Rp mn)
1,890
2,550
BUY
1,830 - 3,150
12,895
6,823
16,230
37,718
Major Shareholder
PT Salim Ivomas Pratama
Public
59.5%
40.5%
• Maintain BUY with lower TP 2,550
We believe the current bearish trend for Lonsum is short lived, as demand
for CPO in 2012 and 2013 are estimated to rise 5% and 7% each year
(Source : Oil World). However, the current high level inventory in Indonesia
and Malaysia will add pressure to the price of CPO and rubber in short term.
Our DCF valuation with WACC 13.8% and terminal growth of 3.0% resulted
in target price of Rp2,550 implying 12.3x FY13F PE. We recommend BUY
with potential upside of 35% from current price.
Financial Highlights
(Rp billion)
Net Sales
Gross Profit
Operating Profit
Net Profit
EPS (Rp/share)
2009A
3,200
1,390
1,019
707
518
2010A
3,593
1,771
1,361
1,033
757
2011A
4,686
2,362
2,006
1,702
249
2012F
4,485
1,844
1,503
1,265
185
2013F
4,820
2,046
1,680
1,414
207
Key Ratios
P/E (x)
P/BV (x)
ROA
ROE
2009A
3.6
0.7
14.6%
18.6%
2010A
2.5
0.6
18.6%
22.7%
2011A
7.6
2.2
25.1%
29.1%
2012F
10.2
2.0
17.1%
19.7%
2013F
9.1
1.8
16.9%
19.3%
Key Assumptions
Avg. Intl. CPO Price CIF (US$/MT)
LSIP Avg. Selling Price
(Rp/kg)
LSIP Avg. Rubber Selling
Price (Rp/kg)
FFB Processed (tons)
CPO Production (tons)
CPO Sales (tons)
CPO Extraction Rate
Kernel Extraction Rate
Rubber Yield
2009A
2010A
2011A
2012F
2013F
Stock Price Chart
4,000
3,000
2,000
1,000
-
681
903
1,119
1,008
1,048
6,415
6,943
7,542
7,834
8,208
16,425
1,596,496
377,505
374,134
23.6%
6.1%
0.8
29,292
1,585,449
365,669
352,437
23.1%
5.8%
0.9
Source: Company, Batavia Prosperindo Sekuritas
42,078
1,923,305
442,949
432,936
23.0%
5.5%
1.2
30,696
1,931,079
434,493
427,367
22.5%
5.4%
0.8
32,879
1,956,598
440,234
436,001
22.5%
5.4%
0.8
Jan-08
Jan-09
Source : Bloomberg
Jan-10
Jan-11
Jan-12
Batavia Stock Focus
6 December 2012
LSIP 9M 2012 Financial Highlights
(Rp billion)
3Q12
Net sales
1,142
Cost of good sold
(675)
Gross profit
467
Operating expense
(95)
Operating income
372
Pretax income
379
Net profit
311
2Q12
Change QoQ
1,230
-7%
(731)
-8%
498
-6%
(92)
4%
407
-8%
419
-10%
340
-9%
9M12
3,372
(1,985)
1,387
(270)
1,117
1,164
950
9M11
Change YoY
3,523
-4%
(1,686)
18%
1,837
-25%
(283)
-4%
1,554
-28%
1,614
-28%
1,312
-28%
FY12F
4,485
(2,641)
1,844
(341)
1,503
1,554
1,265
Achv.
75%
75%
75%
79%
74%
75%
75%
FY12F
1,931,079
434,493
427,367
14,584
14,585
21,726
Achv.
74%
74%
75%
70%
68%
82%
Source: Company, Batavia Prosperindo Sekuritas
LSIP 9M 2012 Operational Highlights
(tons)
3Q12
2Q12
FFB processed
549,521
461,475
CPO production
121,637
104,423
CPO sales
111,403
117,721
Rubber production
3,389
3,333
Rubber sales
3,670
2,520
Seeds "SumBio"
5,582
5,790
Change QoQ
19%
16%
-5%
2%
46%
-4%
9M12
1,433,320
322,270
320,455
10,159
9,899
17,796
9M11
Change YoY
1,378,238
4%
318,197
1%
309,801
3%
10,931
-7%
10,962
-10%
17,580
1%
Source: Company, Batavia Prosperindo Sekuritas
9M 2012 Sales Breakdown
Planted Area
(ha)
Nucleus
Mature
Immature
Plasma
Nucleus
Plasma
2008
2009
2010
2011
9M2012
72,985
23,656
35,781
132,422
77,664
22,632
36,102
136,398
84,929
16,776
35,976
137,681
86,723
15,498
36,513
138,734
91,049
11,737
36,347
139,133
73%
27%
74%
26%
74%
26%
74%
26%
7.1%
1.0%
9.4%
82.5%
74%
26%
Palm Product
Rubber
Seeds
Others
Source: Company, Batavia Prosperindo Sekuritas
Historical CPO Price (CIF Rotterdam)
Average Selling Price
US$/MT
1,600
Rp/kg
12,000
1,200
10,000
8,000
800
6,000
4,000
400
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
2007
2008
2009
2010
LSIP Avg Selling Price
Source: Bloomberg, Batavia Prosperindo Sekuritas
Source: Company, Batavia Prosperindo Sekuritas
2011
Palm Rott
2012F
2013F
Batavia Stock Focus
Income Statement
(Rp billion)
Net sales
COGS
Gross profit
Operating expenses
Operating income
Other incomes/(expenses)
Profit before income tax
Income tax expense
Net income
Balance Sheet
(Rp billion)
Total assets
Current assets
Cash and cash equivalents
Short term investment
Trade receivables
Inventories
Others
Noncurrent assets
Plantation assets
Mature plantations - net
Immature plantations
Fixed assets - net
Plasma receivables
Others
Total liabilities
Current liabilities
Short term bank loans & current
dues
Trade payables
Taxes payable
Other payables
Sales advances
Accrued expenses
Non current liabilities
Long term loans, net current
maturities
Others
Equity
Common share capital
Additional paid-in capital, net
Retained earnings
Cash Flow
(Rp billion)
CFO Total
Net income
Depreciation
Change in WC
Change in others
CFI Total
Change in ST investment
Capex
Change in others
CFF Total
Change in ST debt
Change in LT debt
Equity financing
Dividend payment
Others
Net Cash Flow
6 December 2012
2009A
3,200
(1,809)
1,390
(372)
1,019
(11)
1,008
(301)
707
2010A
3,593
(1,821)
1,771
(411)
1,361
21
1,382
(348)
1,033
2011A
4,686
(2,324)
2,362
(357)
2,006
85
2,091
(389)
1,702
2012F
4,485
(2,641)
1,844
(341)
1,503
51
1,554
(289)
1,265
2013F
4,820
(2,773)
2,046
(366)
1,680
58
1,738
(323)
1,414
2009A
4,845
964
682
77
192
13
3,881
2010A
5,561
1,487
1,161
26
264
36
4,074
2011A
6,792
2,568
2,064
101
368
34
4,224
2012F
7,400
2,649
2,199
76
342
33
4,750
2013F
8,379
3,132
2,672
75
350
35
5,246
1,126
829
1,603
55
267
1,032
679
1,388
631
1,729
57
270
1,007
622
1,505
572
1,825
57
266
952
531
1,786
493
2,162
55
255
973
569
2,059
406
2,448
59
274
1,014
601
60
82
33
64
243
352
83
76
35
157
270
386
112
23
32
65
300
421
114
17
36
62
341
403
120
19
38
67
358
412
30
322
3,813
682
1,030
2,101
386
4,554
682
1,030
2,842
421
5,839
682
1,030
4,127
403
6,424
682
1,030
4,711
412
7,332
682
1,030
5,620
-
2009A
881
707
143
12
(58)
(531)
(386)
36
(702)
(44)
(586)
142
(279)
66
(352)
Source : Company, Batavia Prosperindo Sekuritas
3
2010A
1,415
1,033
197
2
(105)
(402)
(188)
(5)
(497)
(30)
(285)
(181)
516
2011A
1,736
1,702
221
(150)
(118)
(421)
(153)
3
(409)
(416)
7
907
2012F
1,617
1,265
260
54
38
(526)
(540)
14
(955)
(681)
(275)
135
2013F
1,764
1,414
327
(1)
23
(496)
(473)
(23)
(795)
(506)
(289)
473
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Tel : +62-21 520 7374
Fax : +62-21 2598 9821
www.bps.co.id
Research Team
Andy Ferdinand
Head of Research
Banking, Consumer, Gas Infrastructure & Strategy
andy@bps.co.id
Parningotan Julio
Analyst
Technical, Cement & Toll Road
julio@bps.co.id
Yasmin Soulisa
Analyst
Agriculture & Coal
yasmin@bps.co.id
Wisnu Karto
Analyst
Automotive, Heavy Equipment & Poultry
wisnu@bps.co.id
Steven Gunawan
Research Associate
steven@bps.co.id
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Batavia Prosperindo Sekuritas Investment Ratings: BUY – expected total return of 10% or more; HOLD – expected total return of -10% to 10%;
SELL – expected total return of -10% or less. Expected total return is defined as 12-month total return (including dividends).
DISCLAIMER
The information contained in this report has been taken from sources we deem reliable, however, PT. Batavia Prosperindo Sekuritas or its affiliates, cannot
guarantee its accuracy and completeness.
The views expressed in this report accurately reflect personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of
the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations and/or views in this report. Nothing in this report
constitutes a representation that any investment strategy or recommendation contained herein is suitable or appropriate to a recipient’s individual circumstances.
This report is published solely for information purposes and should not be considered as a solicitation or an offer to buy or sell any securities.
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