AALI
Contact our analyst Achmadi
20% upside, Buy
3rd May 2024
Current price Rp 6300
Target price Rp 7550
3rd May 2024
Current price Rp 6300
Target price Rp 7550
Significant Decrease in Productivity
In Q1-2024, AALI's production experienced a significant decrease, dropping by -11.71% to 1.12 million tons. The most substantial decrease was in FFB production, including Nucleus and Plasma, which fell by -12.12%, while CPO and Kernel decreased by -10.82% and -9.09%, respectively. This decline occurred because one-third of AALI’s palm trees, planted between 1994-1997, are now aged 27-30 years, surpassing their prime productivity years. AALI is preparing to allocate a CapEx of approximately IDR 1.5 trillion in 2024 for replanting 5000 hectares of its plantation.
In Q1-2024, AALI's production experienced a significant decrease, dropping by -11.71% to 1.12 million tons. The most substantial decrease was in FFB production, including Nucleus and Plasma, which fell by -12.12%, while CPO and Kernel decreased by -10.82% and -9.09%, respectively. This decline occurred because one-third of AALI’s palm trees, planted between 1994-1997, are now aged 27-30 years, surpassing their prime productivity years. AALI is preparing to allocate a CapEx of approximately IDR 1.5 trillion in 2024 for replanting 5000 hectares of its plantation.
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Continued Profit Generation
Despite a slight increase, AALI continued to grow its profit in Q1-2024. Its EBITDA grew by 6.45% YoY to IDR 714.3 billion, and Net Profit Attributable to Parent Entity rose by 2.59% YoY to IDR 239.88 billion. This growth was by despite a 13.14% increase in Finance Costs and a 7.86% increase in COGS line of Depreciation Expense. Consequently, its EBITDA Margin ratio and NPM ratio increased by 79 bps and 8 bps, reaching 14.88% and 4.90%, respectively. We forecast that AALI will continue to enhance profitability in 2024, with its EBITDA projected to grow by 12.66% YoY to IDR 3,419.29 billion.
Stable Solvency
As of March 2024, AALI's solvency ratio remained stable at 0.18x, similar to the previous year. This stability was attributed to the 1.51% increase in equity attributable to the parent, offsetting the 2.95% growth in interest-bearing debt, thereby minimally impacting the solvency metric. We forecast that AALI’s Debt-to-Equity (D/E) Ratio will slightly increase to 0.20x by December 2024.
Valuation: 20%, Upside, Buy
Based on Q1-2024 results, our EV/EBITDA target is 4.50x. We recommend a “Buy" with a target price of IDR 7,550/share, equating to a 14.40x PER and offering a potential 20% upside.
Despite a slight increase, AALI continued to grow its profit in Q1-2024. Its EBITDA grew by 6.45% YoY to IDR 714.3 billion, and Net Profit Attributable to Parent Entity rose by 2.59% YoY to IDR 239.88 billion. This growth was by despite a 13.14% increase in Finance Costs and a 7.86% increase in COGS line of Depreciation Expense. Consequently, its EBITDA Margin ratio and NPM ratio increased by 79 bps and 8 bps, reaching 14.88% and 4.90%, respectively. We forecast that AALI will continue to enhance profitability in 2024, with its EBITDA projected to grow by 12.66% YoY to IDR 3,419.29 billion.
Stable Solvency
As of March 2024, AALI's solvency ratio remained stable at 0.18x, similar to the previous year. This stability was attributed to the 1.51% increase in equity attributable to the parent, offsetting the 2.95% growth in interest-bearing debt, thereby minimally impacting the solvency metric. We forecast that AALI’s Debt-to-Equity (D/E) Ratio will slightly increase to 0.20x by December 2024.
Valuation: 20%, Upside, Buy
Based on Q1-2024 results, our EV/EBITDA target is 4.50x. We recommend a “Buy" with a target price of IDR 7,550/share, equating to a 14.40x PER and offering a potential 20% upside.
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