LSIP
Contact our analyst Revita
27% upside, Buy
6th July 2023
Current price Rp 1035
Target price Rp1310
6th July 2023
Current price Rp 1035
Target price Rp1310
Strong Production Growth in 1Q23
In 1Q23, LSIP achieved double-digit growth in both Total FFB and CPO production, with increases of 20% YoY and 18% YoY respectively. This growth was driven by a 12% YoY increase in FFB nucleus production to 235,000 tonnes and a significant 139% YoY increase in FFB external purchases to 38,000 tonnes. Palm kernel production volume also rose by 20% YoY. LSIP's total oil palm planted area decreased to 83,742 hectares (ha) in 2022, compared to 85,630 ha in 2021. Additionally, the total planted area, including rubber, decreased to 111,240 ha in 2022 from 114,111 ha in 2021. The CPO extraction rate and palm kernel extraction rate during 1Q23 were 21.79% and 6.27% respectively. Based on these results, we estimate that FFB and CPO production will grow by 22% in 2023, in line with the performance in 1Q23. The CPO and PK extraction rates are projected to remain at 22.49% and 6.27% respectively.
In 1Q23, LSIP achieved double-digit growth in both Total FFB and CPO production, with increases of 20% YoY and 18% YoY respectively. This growth was driven by a 12% YoY increase in FFB nucleus production to 235,000 tonnes and a significant 139% YoY increase in FFB external purchases to 38,000 tonnes. Palm kernel production volume also rose by 20% YoY. LSIP's total oil palm planted area decreased to 83,742 hectares (ha) in 2022, compared to 85,630 ha in 2021. Additionally, the total planted area, including rubber, decreased to 111,240 ha in 2022 from 114,111 ha in 2021. The CPO extraction rate and palm kernel extraction rate during 1Q23 were 21.79% and 6.27% respectively. Based on these results, we estimate that FFB and CPO production will grow by 22% in 2023, in line with the performance in 1Q23. The CPO and PK extraction rates are projected to remain at 22.49% and 6.27% respectively.
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Lower Profit
In 1Q23, LSIP's revenue increased by 18% YoY, reaching IDR 904 billion from IDR 765 billion. This growth is attributed to higher sales volume, despite the lower price of CPO. However, LSIP's bottom line experienced a decline of -63% YoY in 1Q23 due to a significant increase in raw material costs of +72% YoY, driven by higher CPO and FFB production of +17% YoY and +20% YoY respectively. Nevertheless, LSIP maintains a healthy financial position with no bank loans as of 1Q23. We estimate that the bottom line profit in 2023F will reach IDR 1.17 trillion compared to IDR 1.04 trillion in 2022A, primarily due to lower cost of revenue resulting from cost control and efficiency measures. Looking ahead, we anticipate CPO prices to stabilize without significant increases, as we expect supply and demand in the market to normalize.
Valuation: 27% upside
Based on our estimation, we recommend a target price of IDR 1,310 within one year, representing an EV/EBITDA ratio of 2.62x and an EV/ha ratio of 2,042 USD/Ha, or trading at 8.30x PER. With a potential upside of 27%, we recommend a BUY.
In 1Q23, LSIP's revenue increased by 18% YoY, reaching IDR 904 billion from IDR 765 billion. This growth is attributed to higher sales volume, despite the lower price of CPO. However, LSIP's bottom line experienced a decline of -63% YoY in 1Q23 due to a significant increase in raw material costs of +72% YoY, driven by higher CPO and FFB production of +17% YoY and +20% YoY respectively. Nevertheless, LSIP maintains a healthy financial position with no bank loans as of 1Q23. We estimate that the bottom line profit in 2023F will reach IDR 1.17 trillion compared to IDR 1.04 trillion in 2022A, primarily due to lower cost of revenue resulting from cost control and efficiency measures. Looking ahead, we anticipate CPO prices to stabilize without significant increases, as we expect supply and demand in the market to normalize.
Valuation: 27% upside
Based on our estimation, we recommend a target price of IDR 1,310 within one year, representing an EV/EBITDA ratio of 2.62x and an EV/ha ratio of 2,042 USD/Ha, or trading at 8.30x PER. With a potential upside of 27%, we recommend a BUY.
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