LSIP
Contact our analyst Revita
41.6% upside, Buy
24th August 2022
Current price Rp 1190
Target price Rp1685
24th August 2022
Current price Rp 1190
Target price Rp1685
Slower 1H22 production
As of 1H2022, Total FFB and CPO production decreased -21% YoY and –23% YoY respectively driven by weather conditions and oil palm replanting. In 2Q22, FFB nucleus and CPO production increased 24% and 42% respectively compared to the 1Q22. Palm kernel production volume during 1H22 decreased 21% YoY. LSIP’s total oil palm planted area as of 1H22 decreased to 85,259 hectares (ha) from 85,630 ha in 2021. Meanwhile, total planted area include rubber in 1H22 was 112,880 ha, down from 114,111 ha in 2021. CPO extraction rate and palm kernel extraction rate duirng 1H22 were 22.1% and 6.3% respectively. We estimate FFB and CPO production in 2022 will grow -20% respectively inline with the 1H22 result. CPO and PK extraction rates will be 22.60% and 6.27% respectively inline with lower CPO and palm kernel production
As of 1H2022, Total FFB and CPO production decreased -21% YoY and –23% YoY respectively driven by weather conditions and oil palm replanting. In 2Q22, FFB nucleus and CPO production increased 24% and 42% respectively compared to the 1Q22. Palm kernel production volume during 1H22 decreased 21% YoY. LSIP’s total oil palm planted area as of 1H22 decreased to 85,259 hectares (ha) from 85,630 ha in 2021. Meanwhile, total planted area include rubber in 1H22 was 112,880 ha, down from 114,111 ha in 2021. CPO extraction rate and palm kernel extraction rate duirng 1H22 were 22.1% and 6.3% respectively. We estimate FFB and CPO production in 2022 will grow -20% respectively inline with the 1H22 result. CPO and PK extraction rates will be 22.60% and 6.27% respectively inline with lower CPO and palm kernel production
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Higher bottom line
In 1H22 LSIP revenue decreased by -6% YoY from IDR 2,18 trillion to IDR 2,05 trillion. The decrease in revenue is in line with the lower sales volume, despite the higher price of CPO. As a result LSIP was able to book a net profit of IDR 549 billion, up by 9% YoY. LSIP maintained its healthy financial position with no bank loans as of 1H22. We estimate bottom line profit in 2022F will reach IDR 1,29 trillion compared to IDR. 991 billion in 2021A, due to a lower cost of revenue as of 1H22 from cost control and efficiency and a higher average selling price. Going forward, we estimate CPO prices will not rise higher than current price as we expect supply and demand in the market to normalize.
Valuation: 41.6% upside
We estimate a TP within one year of IDR. 1,685 which is EV/EBITDA of 2,63x and EV/ha of 3,392 USD/Ha or trading at 15.05x PER. With 41.6% upside, we recommend to BUY.
In 1H22 LSIP revenue decreased by -6% YoY from IDR 2,18 trillion to IDR 2,05 trillion. The decrease in revenue is in line with the lower sales volume, despite the higher price of CPO. As a result LSIP was able to book a net profit of IDR 549 billion, up by 9% YoY. LSIP maintained its healthy financial position with no bank loans as of 1H22. We estimate bottom line profit in 2022F will reach IDR 1,29 trillion compared to IDR. 991 billion in 2021A, due to a lower cost of revenue as of 1H22 from cost control and efficiency and a higher average selling price. Going forward, we estimate CPO prices will not rise higher than current price as we expect supply and demand in the market to normalize.
Valuation: 41.6% upside
We estimate a TP within one year of IDR. 1,685 which is EV/EBITDA of 2,63x and EV/ha of 3,392 USD/Ha or trading at 15.05x PER. With 41.6% upside, we recommend to BUY.
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