AALI
Contact our analyst Revita
35% upside, Buy
22nd June 2023
Current price Rp 7600
Target price Rp 10245
22nd June 2023
Current price Rp 7600
Target price Rp 10245
1Q23 CPO production -14%
In the first quarter of 2023, AALI produced 268,000 tons of CPO, a 6.2% decrease compared to the same period last year. This decline was accompanied by a 5.30% year-on-year decrease in FFB processed, which can be attributed to a prolonged dry season in 2019. Kernel production also decreased by 13%, from 63,000 tons in 1Q22 to 55,000 tons in 1Q23. For 2023, our production forecast targets a conservative 3% year-on-year growth due to the mature age of the plant, but increasing yields seen over the past decade. It is anticipated that AALI's production growth in 2023 will mainly come from third-party fruit purchases and Plasma Plantations, with a slight increase from nucleus plantation yield optimization. Based on the 1Q23 results, the adjusted targets for FFB and CPO production in 2023 are 4.4 million tons and 1.36 million tons, respectively.
In the first quarter of 2023, AALI produced 268,000 tons of CPO, a 6.2% decrease compared to the same period last year. This decline was accompanied by a 5.30% year-on-year decrease in FFB processed, which can be attributed to a prolonged dry season in 2019. Kernel production also decreased by 13%, from 63,000 tons in 1Q22 to 55,000 tons in 1Q23. For 2023, our production forecast targets a conservative 3% year-on-year growth due to the mature age of the plant, but increasing yields seen over the past decade. It is anticipated that AALI's production growth in 2023 will mainly come from third-party fruit purchases and Plasma Plantations, with a slight increase from nucleus plantation yield optimization. Based on the 1Q23 results, the adjusted targets for FFB and CPO production in 2023 are 4.4 million tons and 1.36 million tons, respectively.
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Maintain a double-digit EBITDA margin
As of 1Q23, AALI experienced a 27.7% year-on-year decrease in revenue, amounting to IDR 4.8 trillion. This decline aligns with the 19.3% year-on-year decrease in the average CPO price and the 53.1% year-on-year decrease in the average Kernel price during 1Q23. The decrease in sales led to a 54% year-on-year fall in net profit attributable to shareholders in 1Q23, which amounted to IDR 225 billion. It is estimated that net profit in 2023-2024F will reach IDR 1.64 trillion and IDR 1.48 trillion, respectively, compared to IDR 1.73 trillion in 2022FY, as the CPO price is expected to be lower than in 2022 due to improved rainfall and higher industry output. Despite lower revenue and net profit, AALI aims to maintain an average EBITDA margin of 16% during 2023-2024F, compared to 18.6% in 2022FY.
Valuation: 35% upside
Based on the 1Q23 results, the adjusted target price (TP) for AALI within one year is IDR 10,245, which represents an EV/EBITDA ratio of 5.25x and an EV/ha ratio of 3,086 USD/Ha, or trading at 13.32x PER. With a projected 35% upside, our recommendation to BUY is maintained.
As of 1Q23, AALI experienced a 27.7% year-on-year decrease in revenue, amounting to IDR 4.8 trillion. This decline aligns with the 19.3% year-on-year decrease in the average CPO price and the 53.1% year-on-year decrease in the average Kernel price during 1Q23. The decrease in sales led to a 54% year-on-year fall in net profit attributable to shareholders in 1Q23, which amounted to IDR 225 billion. It is estimated that net profit in 2023-2024F will reach IDR 1.64 trillion and IDR 1.48 trillion, respectively, compared to IDR 1.73 trillion in 2022FY, as the CPO price is expected to be lower than in 2022 due to improved rainfall and higher industry output. Despite lower revenue and net profit, AALI aims to maintain an average EBITDA margin of 16% during 2023-2024F, compared to 18.6% in 2022FY.
Valuation: 35% upside
Based on the 1Q23 results, the adjusted target price (TP) for AALI within one year is IDR 10,245, which represents an EV/EBITDA ratio of 5.25x and an EV/ha ratio of 3,086 USD/Ha, or trading at 13.32x PER. With a projected 35% upside, our recommendation to BUY is maintained.
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