AALI
Contact our analyst Revita
38% upside, Buy
27th October 2022
Current price Rp 8,600
Target price Rp 11,895
27th October 2022
Current price Rp 8,600
Target price Rp 11,895
8M22 CPO production -15%
In the eight months up to August 2022, AALI produced 861,000 tons of CPO, a decrease of -14.9% compared to the same period last year. This decrease was accompanied by a decrease in FFB processed of -13.0% YoY because of a long dry season in 2019. For 2022 we still maintain our production target growth of 5% YoY as the majority of plants are mature and yield has been increasing over the last 10 years. AALI’s planted area age was 15.8 years in 2021 compared to 15.5 years in 2020. AALI targets to complete replanting another 5,000 hectares this year. As a result, nucleus planted area will decrease while the plasma area will increase. The increase in production this year will therefore mostly come from third party fruit purchases and Plasma Plantations with a slight increase from nucleus plantation yield optimization as digitalization has helped to overcome work and production constraints during the pandemic. We adjust our target for FFB and CPO production in 2022 to 4,28 mn tons and 1,33 mn tons respectively. We expect production in 2022 will remain affected by the long dry season in 2019 as it takes about four years for an oil palm tree to produce fruit which is large enough for processing.
In the eight months up to August 2022, AALI produced 861,000 tons of CPO, a decrease of -14.9% compared to the same period last year. This decrease was accompanied by a decrease in FFB processed of -13.0% YoY because of a long dry season in 2019. For 2022 we still maintain our production target growth of 5% YoY as the majority of plants are mature and yield has been increasing over the last 10 years. AALI’s planted area age was 15.8 years in 2021 compared to 15.5 years in 2020. AALI targets to complete replanting another 5,000 hectares this year. As a result, nucleus planted area will decrease while the plasma area will increase. The increase in production this year will therefore mostly come from third party fruit purchases and Plasma Plantations with a slight increase from nucleus plantation yield optimization as digitalization has helped to overcome work and production constraints during the pandemic. We adjust our target for FFB and CPO production in 2022 to 4,28 mn tons and 1,33 mn tons respectively. We expect production in 2022 will remain affected by the long dry season in 2019 as it takes about four years for an oil palm tree to produce fruit which is large enough for processing.
Sign up here to trade what you want, when you want & wherever ⬇️ you are ⬇️
Double-digit profit growth
Despite lower production, As of June 2022, AALI recorded an increase in net revenue by 1.2% to IDR 11 trillion. The increase in net revenue was in line with the increase in the selling price of CPO, which was up by 46.2% YoY. The net profit attributable to shareholders in June 2022 was IDR 809 billion or an increase of 24.6% compared to the same period last year. We estimate bottom line profit in 2022F will reach IDR 2.77 trillion compared to IDR. 1.97 trn in 2021A inline with a higher CPO price than 2021A.
Valuation: 38% upside
We estimate a TP within one year of IDR 11,895, EV/EBITDA of 6.47x and EV/ha of 4,309 USD/Ha or trading at 8.27x PER. With 60% upside, we maintain our recommendation to BUY.
Despite lower production, As of June 2022, AALI recorded an increase in net revenue by 1.2% to IDR 11 trillion. The increase in net revenue was in line with the increase in the selling price of CPO, which was up by 46.2% YoY. The net profit attributable to shareholders in June 2022 was IDR 809 billion or an increase of 24.6% compared to the same period last year. We estimate bottom line profit in 2022F will reach IDR 2.77 trillion compared to IDR. 1.97 trn in 2021A inline with a higher CPO price than 2021A.
Valuation: 38% upside
We estimate a TP within one year of IDR 11,895, EV/EBITDA of 6.47x and EV/ha of 4,309 USD/Ha or trading at 8.27x PER. With 60% upside, we maintain our recommendation to BUY.
Previously
