London Sumatra(LSIP IJ)

Transcription

1 Equity Research Company Update Friday,02 November 2018 BUY Maintain Last price (IDR) 1,290 Target Price (IDR) 2,000 Upside/Downside +55.0% Previous Target Price (IDR) 1,150 Stock Statistics Sector Bloomberg Ticker Plantation LSIP IJ No of Shrs (mn) 6,820 Mkt. Cap (IDRbn/USDmn) 8,798/579 Avg. daily T/O (IDRbn/USDmn) 20.2/1.3 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 LSIP relative to JCI Index Source : Bloomberg London Sumatra(LSIP IJ) Still Upbeat We fine tune our FY18/19 net profits estimates by -17%/-1% to Rp685bn/Rp803bn based on changes in our CPO price and exchange rate assumptions. We also keep our FY18 FFB growth assumption of 10% and expect 4Q18 sales volume to remain buoyant, supported by drawdown from inventory. Maintain BUY. 9M18 results summary. LSIP posted 3Q18 net profits of Rp120bn (-43% YoY, +10% QoQ), resulting in 9M18 net profits of Rp345bn (-46.1% YoY). This is only 58% of our FY18 core profit forecast of Rp598bn (stripping out one-time gains from the sale of land to ICBP) and 61% of the consensus. The weak result was mainly due to lower CPO ASP in 9M18. The 9M18 CPO ASP and sales volume stood at Rp7,435/kg (-10.4% YoY) and 290.9k tons (-8.6% YoY). However, higher 3Q18 net profits were boosted by higher sales volume. 3Q18 CPO ASP and sales volume stood at Rp6,845/kg (-12.3% YoY and QoQ) and 119.9k tons (+14.2% YoY, +32.0% QoQ). We expect buoyant sales volume in 4Q18. After posting strong production with 3Q18 and 9M18 CPO production at 136k tons (+26.3% YoY, +38.9% QoQ) and 322.8k tons (+12.0% YoY), the company revised up its FY18 FFB growth estimate to 10-15% (from 5-10%). We maintain our FY18 FFB growth assumption of 10%, implying 4Q18 CPO sales volume of 108.5k tons (+3.3% YoY, -9.5% QoQ). Due to a good harvest, LSIP s CPO inventory balance rose to ~49k tons in Sep 18 (from 32k tons in Jun 18). As such, we expect 4Q18 sales volume to reach at least 49k tons from the drawdown. We fine tune our FY18/19 assumptions. Due to the persistently low CPO price at MYR2,100-2,200/ton, we lower our FY18 CPO price assumption to MYR2,300/ton (from MYR2,450/ton), while keeping our FY19 CPO price assumption unchanged at MYR2,550/ton. Meanwhile, we also adjust our FY18/19 MYR/USD exchange rate assumption to MYR4.0/USD (unchanged)/myr4.1/usd (from MYR4.0/USD) and our FY18/19 IDR/USD exchange rate assumption to Rp14,000/USD (from Rp13,600/USD)/ Rp14,400/USD (from Rp13,600/USD). Hence, we fine-tune our FY18/19 net profit estimates by -17%/-1% to Rp685bn/Rp803bn respectively. Maintain BUY. We maintain our BUY call on LSIP with an unchanged TP of Rp2,000 based on 17.0x P/E and FY19 EPS. Our BUY call reflects a more bullish outlook on the CPO price in FY19 which we expect to trend higher on the expectation of improving demand, particularly from the full impact of B20 implementation and slower supply growth. 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 3,955 4,586 4,673 EBITDA (IDRbn) 1,159 1, ,388 1,426 EBITDA Growth (%) (33.0) Net profit (IDRbn) EPS (IDR) EPS growth (%) (4.7) 28.6 (10.3) BVPS (IDR) 1, , , , ,398.2 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. LSIP 9M18 Results Summary LSIP 3Q18 Results 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 YoY QoQ CPO Sales Volume (Tons) 120,099 93, , ,176 80,173 90, ,928 14% 32% PK Sales Volume (Tons) 30,929 22,557 30,886 25,647 23,426 19,151 34,322 11% 79% Rubber Sales Volume (Tons) 2,797 2,917 2,535 2,766 2,248 1,480 3,062 21% 107% % of ours % of consensus Implied CPO Price (Rp/kg) 8,885 8,086 7,805 8,175 7,895 7,807 6,845-12% -12% Implied PK Price (Rp/kg) 9,101 5,963 6,320 8,017 6,651 5,582 5,355-15% -4% Implied Rubber Price (Rp/kg) 28,495 28,728 22,170 22,270 21,708 21,424 21,226-4% -1% COGS/kg (Rp/kg) 6,067 7,087 5,829 6,666 6,430 6,376 5,935 2% -7% Revenue (Rp Bn) 1,464 1,004 1,107 1, ,111 0% 24% 68% 67% Gross profit (Rp Bn) % 1% 56% 60% Operating Expense (Rp Bn) (83) (84) (94) (95) (74) (85) (99) 6% 17% Operating profit (Rp Bn) % -12% 47% 44% Int Expense (Rp Bn) (0) (0) (0) (0) (0) (0) (0) -9% -20% Forex Gain/(Loss) (Rp Bn) (3) (0) Others and int income (Rp Bn) 12 (18) 49 (24) Pretax profit (Rp Bn) % 3% 41% 53% Net profit (Rp Bn) % 10% 42% 61% Tax Rate (%) 21% 33% 23% 31% 18% 27% 22% Gross Margin 37.4% 18.2% 28.4% 25.6% 23.3% 21.6% 17.6% Operating Margin 31.8% 9.8% 20.0% 17.4% 14.7% 12.1% 8.6% Net Income Margin 25.6% 5.4% 19.1% 10.7% 13.4% 12.2% 10.8% See important disclosure at the back of this report 3

4 Exhibit 6. Forecast Change LSIP 2018F 2019F 2020F In Rpbn New Old %change New Old %change New Old %change Profit & Loss Revenue 3,955 4,197-6% 4,586 4,594 0% 4,673 4,681 0% COGS (3,106) (3,149) -1% (3,264) (3,259) 0% (3,324) (3,319) 0% Gross profit 850 1,048-19% 1,322 1,335-1% 1,349 1,362-1% Operating profit % % % Net profit % % % Core profit % % % Gross margin 21.5% 25.0% 28.8% 29.1% 28.9% 29.1% Operating margin 13.0% 16.8% 20.9% 21.2% 20.9% 21.2% Net margin 17.3% 19.7% 17.5% 17.7% 17.8% 18.0% CPO Price (MYR/ton) 2,300 2,450-6% 2,550 2,550 0% 2,550 2,550 0% LSIP's CPO Price (Rp/kg) 7,424 7,880-6% 8,318 8,230 1% 8,318 8,230 1% LSIP's Rubber Price (Rp/kg) 21,483 21,465 0% 22,097 21,465 3% 22,097 21,465 3% FFB Production (k tons) 1,406 1,406 0% 1,442 1,442 0% 1,470 1,470 0% FFB Processed (k tons) 1,827 1,827 0% 1,872 1,872 0% 1,910 1,910 0% 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 14,000 13,600 14,400 13,600 14,400 13,600 See important disclosure at the back of this report 4

5 Exhibit 7. Income Statement Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Revenue 3,848 4,738 3,955 4,586 4,673 COGS (2,737) (3,395) (3,106) (3,264) (3,324) Gross profit 1,111 1, ,322 1,349 EBITDA 1,159 1, ,388 1,426 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) Pre-tax profit 779 1, ,055 1,092 Income tax (186) (243) (215) (252) (261) Minority interest Net profit Core Net Profit Exhibit 8. Balance Sheet Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Cash & cash equivalent 1,141 1,633 1,971 2,444 2,970 Receivables Inventory Other Curr. Asset Fixed assets - Net 4,392 4,090 4,031 4,109 4,206 Other non-curr.asset 3,147 3,486 3,529 3,452 3,342 Total asset 9,459 9,744 10,189 10,730 11,227 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 1,687 1,699 1,686 Shareholder'sFunds 7,640 8,116 8,496 9,025 9,536 Minority interests Total Equity & Liabilities 9,459 9,744 10,189 10,730 11,227 See important disclosure at the back of this report 5

6 Exhibit 9. Cash Flow Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Net income Depreciation and Amort Change in Working Capital (206) 228 (109) (57) 18 OtherOper. Cash Flow 217 (222) (12) (101) (137) Operating Cash Flow 975 1, ,073 1,160 Capex (419) (249) (423) (421) (427) Others Inv. Cash Flow 134 (126) Investing Cash Flow (284) (375) (326) (324) (311) Net change in debt New Capital Dividend payment (252) (239) (305) (274) (321) Other Fin. Cash Flow (34) (49) (2) (2) (2) Financing Cash Flow (287) (288) (307) (276) (323) Net Change in Cash Cash - begin of the year 737 1,141 1,633 1,971 2,444 Cash - end of the year 1,141 1,633 1,971 2,444 2,970 Exhibit 10. Key Ratios Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Growth (%) Sales (8.2) 23.1 (16.5) EBITDA (33.0) Operating profit (47.9) Net profit (4.7) 28.6 (10.3) 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 6