Company Report
|
May 17, 2018
AALI’s sales whittled away 1% from IDR4.49 trillion in 1Q17 into IDR4.44 in
1Q18. Nevertheless,
its net profit tumbled 55%
from IDR801 billion in
1Q17 into IDR355 in 1Q18. The tumble was attributable to the plunge in
gross profit margin from 31% 1Q17 into 17% 1Q18.
The portion of production costs experienced no significant surge as it only
nudged up 2%. In 1Q17, its portion to sales was 76%, and nudged up 2%
into 78% in 1Q18. The decline in net profit was mainly attributable to
the
hike of 12% in finished good inventory portion to sales
.
CPO Price: Determinant of AALI’s Performance
AALI’s performance is reliant upon CPO prices in markets. We oversee that
CPO prices currently settle at its support level since 2016
; thus, the
decline in CPO prices are likely limited. Additionally, the current backdrop is
also underpinned by the decrease in Malaysia’s CPO inventories coupled
with the downbeat production. The stable demand for CPO inevitably spurs
A Glance at AALI
AALI, a merger among companies in the initial stage, started to develop agriculture
industry in Indonesia since 1988. Having best management practice, AALI becomes one
of the biggest oil palm agriculture companies in Indonesia. In the late of 2016, it
managed the oil palm plantations with the total areas of 297,011 hectares situated in
Sumatra, Kalimantan, and Sulawesi Islands.
It not only manages oil palm agriculture but also develops downstream industry with a
view to maintaining its business sustainability. Its attempts to maintain business
sustainability are embodied in the operation of oil refiners in North Mamuju Regency of
West Sulawesi Province, and Dumai in Riau Province. In 2016, it operated a fertilizer
mixing plant in Donggala Regency of Central Sulawesi Province, and developed the
integrated business of oil palm-and cow farm in West Kotawaringin Regency of Center
Kalimantan Province.
CPO Industry in ASEAN
Having oil palm production capacity of 38.5 million tons, Indonesia is the world’s biggest
oil palm producer. Malaysia is the world’s second
-biggest oil palm producer with the
production capacity of 20.5 million tons. The two countries virtually dominate 84% of the
total world’s oil palm production. Meanwhile, Thailand is world’s third
-biggest oil palm
producer with the production capacity of 2.7 million tons.
Source: Company, NHKS research
CPO Sales Trend |
2014 - 2018
Performance Highlights
Malaysia Palm Oil Inventory (000’ tons) |
2016-2018
Malaysia Palm Oil Production Data (000’ tons) |
2016-2018
Source: Bloomberg, NHKS Research
CPO CIF Rotterdam (IDR/kg) |
2014-2018
Source: Company, NHKS research
AALI Sales Trend |
2013 - 2018
Source: Company, NHKS research
Multiple Valuation
Forward P/E band |
Last 2 years
Source: NHKS research
Dynamic Forward P/E
band
| Last 2 years
Source: NHKS research
Rating and target price update
Source: NHKS research, Bloomberg
Target Price Revision
Closing and Target Price
Source: NHKS research
Analyst Coverage Rating
Source: Bloomberg
Date
Rating
Target Price
Last Price
Consensus
vs Last Price
vs Consensus
01/03/2018
Hold
14,425 (Dec 2018)
13,275
16,932
+8.7%
-14.8%
03/09/2018
Buy
18,375 (Dec 2018)
14,750
15,955
+24.6%
+15.2%
05/17/2018
Buy
14,800 (Dec 2018)
12,000
15,438
+23.3%
-4.1%
NH Korindo Sekuritas Indonesia (NHKS) stock ratings
Period: End of year target price
Summary of Financials
DISCLAIMER
AALI Summary
Last Price (IDR) 12,000
Target Price (IDR) Dec 2018 14,800 2016/12A 2017/12A 2018/12E 2019/12E
Rating: Buy ROE 13.7% 11.1% 10.2% 10.6%
ROA 8.8% 8.2% 7.6% 8.0%
ROIC 9.3% 8.9% 8.2% 8.7%
EBITDA/Equi ty 25.5% 23.5% 22.4% 23.1%
In IDR bn 2016/12A 2017/12A 2018/12E 2019/12E EBITDA/As s ets 16.3% 17.2% 16.7% 17.5%
Sales 14,121 17,306 19,264 21,209 Ca s h Di vi dend (IDR bn) 903 863 874 965
Growth (% y/y) 8.1% 22.5% 11.3% 10.1% Di vi dend Yi el d (%) 2.8% 3.4% 3.8% 4.2% COGS (10,445) (13,160) (15,037) (16,555) Pa yout Ra ti o (%) 45.0% 42.9% 45.0% 45.0%
Gross Profit 3,676 4,145 4,227 4,654 DER 23.3% 21.4% 20.4% 17.8%
Gross Margin 26.0% 24.0% 21.9% 21.9% Net Gea ri ng 30.9% 27.9% 26.2% 22.4% Opera ti ng Expens es (1,017) (1,094) (1,224) (1,348) LT Debt to Equi ty 21.0% 18.2% 17.4% 16.3%
EBIT 2,659 3,051 3,003 3,306 Ca pi ta l i za ti on Ra ti o 18.9% 17.6% 17.0% 15.1%
EBIT Margin 18.8% 17.6% 15.6% 15.6% Equi ty Ra ti o 72.6% 74.3% 74.6% 76.5% Depreci a ti on 1,070 1,189 1,284 1,392 Debt Ra ti o 16.9% 15.9% 15.2% 13.6%
EBITDA 3,728 4,240 4,287 4,698 Fi na nci a l Levera ge 156.1% 136.1% 134.3% 132.4%
