BWPT Rekomendasi Beli

BW Plantation 1Q12 Result Top line growth from higher CPO volumes Revenues grew 55% YoY in 1Q12 to Rp 268bn thanks to higher CPO sales volume of 31k tons (+75.8% YoY) despite slightly lower CPO ASP of Rp 7,835/kg (-0.5% YoY). Net profits grew 52% to Rp 82bn in 1Q12, or 21% of our full year forecast. Margins, however, were weaker. Lower margins margin were due to higher fertilizer costs and employee benefits, +17-28% YoY, respectively. The gross margin fell by 1,110bps to 61%, while the operating margin declined by 850bps to 44.8%. Higher growth from plasma despite its small portion Production wise, plasma FFB production grew 46.3% YoY to 5,032 tons while nucleus FFB production grew a slower 3.6% YoY to 111,215 tons. As a result, CPO and PK production was up by 8.2-11.1% to 27,426 tons and 4,688 tons, respectively. The CPO and PK production in 1Q12 reached 21% of our full year forecast. Indeed, according to the management, 1H12 will account for around 40% of this year's production. CPO sales volume increased to 31,001 tons (+75.8% YoY), which includes last year's inventory of 2,733 tons, while PK sales volume was little changed at 5,100 tons. 150k ha of land bank by 2015 The company's target is to increase its land bank to 150k ha by 2015 from the current 114k ha. This year, the company plans to increase its oil palm plantations area of 10,000 ha to 20,000 ha in Kalimantan. BWPT has allocated Rp 270bn for acquisition purposes. In March 2012, BWPT signed a CSPA with PT Prima Cipta Selaras, which has a location permit covering 11,203 ha, some 2,059 ha of which have already been planted in nucleus areas, in a deal worth Rp 175bn. The estates are located in Kutai, East Kalimantan, near the SSS estates. Net gearing at its highest level Net gearing has increased to 135% from 75% in 1Q11. This year capex will reach Rp 1tn with funding coming from additional bank loans with a lower cost of funds. Note that another 60 tons/hour mill will be built at the SSS estates this year with expected completed by 2014 to process FFB from 24,433 ha of new maturing areas. The cost of the new mill is Rp 120bn. Capex will also be spent on new plantings and to acquire more land bank. Maintain BUY, higher TP of Rp 1,910 We have adjusted our model to reflect the new acquisition and reduced our WACC assumption to 12.8% to reflect the lower risk free interest rate of 8.5%. We maintain our BUY recommendation and raise our TP to Rp 1,910, implying FY 12-13F P/E of 20.5-14.6 x, which is justified, we believe by the company's strong production growth profile, high productivity and excellent margins. The stock currently trades at 17.7 x P/E, offering 15.8% potential upside.