London Sumatra(LSIP IJ)

Transcription

1 Equity Research Company Update Monday,30 July 2018 BUY Maintain Last price (IDR) 1,000 Target Price (IDR) 1,150 Upside/Downside +15.0% Previous Target Price (IDR) 1,300 Stock Statistics Sector Bloomberg Ticker Plantation LSIP IJ No of Shrs (mn) 6,820 Mkt. Cap (IDRbn/USDmn) 6,820/473 Avg. daily T/O (IDRbn/USDmn) 17.4/1.2 Major shareholders (%) Salim Ivomas Pratama 59.5 Public 40.5 Estimated free float 40.4 EPS Consensus (IDR) 2018F 2019F 2020F Danareksa Consensus Danareksa/Cons (5.6) LSIP relative to JCI Index London Sumatra(LSIP IJ) Lost in Translation LSIP booked weak 1H18 earnings mainly due to weaker-than-expected CPO and PK sales volume. The 2Q18 CPO production was better, although this has not yet been reflected in the sales volume. We revise up our FY18 FFB and CPO production growth estimates to 10% (from 7%) and 7% (from 5%) respectively, but lower our sales volume target. We adjust down our FY18 net/core profits estimates by 10%/13% to Rp826bn and Rp598bn, respectively, and lower our TP to Rp1,150. Maintain BUY. Improving production, not reflected in the sales volume yet. LSIP booked 2Q18 net profits of Rp109bn (+103% YoY, -6% QoQ), culminating in 1H18 net profits of Rp225bn (-47.5% YoY). The 1H18 CPO and PK sales volume at 171k tons (-20.0% YoY) and 43k tons (-20.0% YoY) was weaker than expected. In 2Q18, CPO and PK sales were recorded at 91k tons (-2.7% YoY, +13.3% QoQ) and 19k tons (-15.1% YoY, -18.2% QoQ). The 1H18 CPO ASP was reported at Rp7,849/kg (-8.0% YoY), mostly in-line with our FY18 CPO ASP assumption of Rp7,880/kg. Despite weak sales volume, 2Q18 CPO production was more promising at 98k tons (+14.7% YoY, +10.3% QoQ), leading to 1H18 CPO production of 186k tons (+3.5% YoY). FY18 production guidance revised up, slightly lower sales volume target. As a result of improved production and weak sales, we raise our FY18 FFB production growth assumption to 10% (from 7%) and CPO production growth assumption to 7% (from 5%), but trim our CPO and PK sales volume growth estimates by 2%/1% respectively to 399k tons and 110k tons. Based on our check with the company, the FY18 FFB and CPO production growth guidance has been maintained at 5-10%, hinting that production volume is likely to be at the higher end and that 2H18 is expected to be higher seasonally. As per the end of Jun 18, there was ~7-8k tons of palm oil that has yet to be booked as revenues due to timing issues and this should be reflected in the following quarters. FY18 net profits estimate trimmed by 10%; Maintain BUY with a revised TP of Rp1,150. After accounting for lower CPO and PK sales volume, we revise down our FY18 net profits estimate by 10% to Rp826bn, translating into core profits of Rp598bn. Our revised earnings estimate prices in a lower rubber ASP of Rp21,465/kg (-18% YoY), in which the 1H18 rubber ASP stood at Rp21,595/kg (- 25% YoY). Given our lower earnings estimate, we reduce our TP to Rp1,150 (from Rp1,300), based on 13.0x sector P/E (-1SD) and FY18 core EPS. LSIP currently trades at 11.4x FY18 P/E. Source : Bloomberg x Yudha Gautama (62-21) ext 3509 yudha.gautama@danareksa.com Key Financials Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Revenue (IDRbn) 3,848 4,738 4,197 4,594 4,681 EBITDA (IDRbn) 1,159 1,373 1,111 1,401 1,439 EBITDA Growth (%) (19.1) Net profit (IDRbn) EPS (IDR) EPS growth (%) (4.7) (1.4) 3.3 BVPS (IDR) 1, , , , ,413.1 DPS (IDR) PER (x) PBV (x) Dividend yield (%) EV/EBITDA (x) Source : LSIP, Danareksa Estimates See important disclosure at the back of this report 1

2 Exhibit 1. Revenues and Growth Exhibit 2. Net Profits and Growth Exhibit 3. Margins Exhibit 4. Gearing Level See important disclosure at the back of this report 2

3 Exhibit 5. Forecast Change Summary LSIP 2018F 2019F 2020F In Rpbn New Old %chang e New Old %chang e New Old %chang e Profit & Loss Revenue 4,197 4,316-3% 4,594 4,597 0% 4,681 4,684 0% COGS (3,149) (3,150) 0% (3,259 ) (3,259 ) 0% (3,319) (3,319) 0% Gross profit 1,048 1,166-10% 1,335 1,337 0% 1,362 1,364 0% Operating profit % % % Net profit % % % Core profit % % % Gross margin 25.0% 27.0% 29.1% 29.1% 29.1% 29.1% Operating margin 16.8% 19.0% 21.2% 21.2% 21.2% 21.2% Net margin 19.7% 21.2% 17.7% 17.8% 18.0% 18.1% CPO Price (MYR/ton) 2,450 2,450 0% 2,550 2,550 0% 2,550 2,550 0% LSIP's CPO Price (Rp/kg) 7,880 7,880 0% 8,230 8,230 0% 8,230 8,230 0% LSIP's Rubber Price (Rp/kg) 21,465 26,019-18% 21,465 26,019-18% 21,465 26,019-18% FFB Production (k tons) 1,406 1,368 3% 1,442 1,402 3% 1,470 1,430 3% FFB Processed (k tons) 1,827 1,788 2% 1,872 1,833 2% 1,910 1,870 2% CPO Production (k tons) % % % CPO Sales Volume (k tons) % % % Kernel Sales Volume (k tons) % % % Rubber Sales Volume (k tons) % % % USD MYR Assumptions USD IDR Assumptions 13,600 13,600 13,600 13,600 13,600 13,600 See important disclosure at the back of this report 3

4 Exhibit 6. Income Statement Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Revenue 3,848 4,738 4,197 4,594 4,681 COGS (2,737) (3,395) (3,149) (3,259) (3,319) Gross profit 1,111 1,343 1,048 1,335 1,362 EBITDA 1,159 1,373 1,111 1,401 1,439 Oper. profit Interest income Interest expense (1) (1) (2) (2) (2) Forex Gain/(Loss) (7) Income From Assoc. Co s (60) (9) (6) (6) (6) Other Income (Expenses) 28 (31) (4) Pre-tax profit 779 1,006 1,085 1,070 1,106 Income tax (186) (243) (259) (255) (264) Minority interest Net profit Core Net Profit Exhibit 7. Balance Sheet Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Cash & cash equivalent 1,141 1,633 2,103 2,538 3,070 Receivables Inventory Other Curr. Asset Fixed assets - Net 4,392 4,090 4,030 4,106 4,199 Other non-curr.asset 3,147 3,486 3,531 3,458 3,352 Total asset 9,459 9,744 10,339 10,826 11,329 ST Debt Payables Other Curr. Liabilities Long Term Debt Other LT. Liabilities 1,032 1,206 1,206 1,206 1,206 Total Liabilities 1,813 1,622 1,696 1,699 1,685 Shareholder'sFunds 7,640 8,116 8,637 9,121 9,638 Minority interests Total Equity & Liabilities 9,459 9,744 10,339 10,826 11,329 See important disclosure at the back of this report 4

5 Exhibit 8. Cash Flow Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Net income Depreciation and Amort Change in Working Capital (206) 228 (113) (52) 18 OtherOper. Cash Flow 217 (222) (18) (103) (141) Operating Cash Flow 975 1,155 1,101 1,088 1,167 Capex (419) (249) (424) (423) (427) Others Inv. Cash Flow 134 (126) Investing Cash Flow (284) (375) (324) (320) (307) Net change in debt New Capital Dividend payment (252) (239) (305) (330) (326) Other Fin. Cash Flow (34) (49) (2) (2) (2) Financing Cash Flow (287) (288) (307) (332) (328) Net Change in Cash Cash - begin of the year 737 1,141 1,633 2,103 2,538 Cash - end of the year 1,141 1,633 2,103 2,538 3,070 Exhibit 9. Key Ratios Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Growth (%) Sales (8.2) 23.1 (11.4) EBITDA (19.1) Operating profit (28.6) Net profit (4.7) (1.4) 3.3 Profitability (%) Gross margin EBITDA margin Operating margin Net margin ROAA ROAE Leverage Net Gearing (x) (0.1) (0.2) (0.2) (0.3) (0.3) Interest Coverage (x) , Source : LSIP, Danareksa Estimates See important disclosure at the back of this report 5

6 See important disclosure at the back of this report 6