Stock Focus

Friday, September 03, 2010

Building momentum
PP London Sumatra • Higher sales volume.
Sales contribution in first semester 2010 were as follows: palm
Stock Data products 76%, rubber 18%, seeds 5%, and others 1%, while
Price Rp 9,300 sales composition in first semester 2009 were as follows: palm
Target Rp 10,685 products 84%, rubber 12%, seeds 2%, and others 2%. Despite
Recommendation BUY higher sales, cost of goods sold in first semester 2010
52-weeks range Rp 7,000 – 10,350
decreased by 3.3% mainly due to lower upkeep & cultivation
Market Cap (Rp bn) 12,522
Outstanding shares (mn shares) 1,346
cost as well as lower crops purchased from Plasma and third
Daily average volume (‘000 shares) 5,080 parties. Operating expenses also decreased by 12.0% mainly
Daily average value (Rp mn) 47,244 due to lower remuneration expenses. Income from operations
increased by 43.4% to Rp570.7 billion from Rp398.1 billion and
operating margin improved to 36.4% from 27.5% mainly due to
Shareholders the impact of stronger prices of rubber and improved “SumBio”
SIMP 32.79% oil palm seeds sales volume as well as lower operating
Credit Suisse Singapore Trust Acc. Client SIM 24.62% expenses. Overall, net income increased 45.7% to Rp417.8
Credit Suisse Singapore Trust Acc. Client billion from Rp286.7 billion.
Indofood Agri Resources Ltd. 8.17%
Public 34.42%
• Production increased.
Nucleus FFB production reached 511.8 thousand tons in first
semester 2010, which is 1.6% lower compared to 520.2
thousand tons in first semester 2009. Meanwhile, FFB
purchased from Plasma and third parties decreased 20.4%
20 4% to
170.6 thousand tons. As a result, in first semester
2010, Lonsum produced 159.2 thousand tons of CPO, which is
Stock Price 4.0% lower compared to 165.9 thousand tons in first semester
2009. Rubber production decreased 11.3% to 10,622 tons
12,000
mainly due to less crop purchased from Plasma and third
parties.
9,000
• Revised valuation. Based on our valuation, fair value LSIP
6,000 we revised from Rp. 9,410 to Rp. 10.685 with DCF valuation
method. We conducted the valuation with 17.7% WACC
3,000 assumptions. Currently LSIP shares transacted at PE 11.8X
for 2010F and PE 9.6X for 2011F.
0
Financial Highlights
Jul‐09 Oct‐09 Jan‐10 Apr‐10 Jul‐10
In Rp Billion 2008A 2009A 2010F 2011F 2012F
Source: Bloomberg
g Revenue 3 846
3,846 3 200
3,200 3 552
3,552 3 907
3,907 4 258
4,258
Gross Profit 1,861 1,390 1,705 1,914 2,129
Operational Profit 1,314 1,019 1,172 1,367 1,576
Net Profit 928 707 893 1,096 1,320
EPS 682 525 663 814 980

Ratio Highlights 2008A 2009A 2010F 2011F 2012F

P/E (X)
P/E (X)   9.8 13.3 11.8 9.6 8.0
P/BV (X)   3.2 4.1 2.2 1.9 1.6
Pardomuan Sihombing ROA   18.8% 14.6% 15.3% 14.2% 15.0%
pardomuan.sihombing@recapital.co.id ROE   29.0% 18.6% 30.7% 32.1% 33.0%
62 21 2702277  Ext. 1051 Source: Company, Recapital Securities

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 Friday, September 03, 2010

LSIP 1H2010 Financial Highlights

In Rp Billion 1Q09 2Q10 HoH (%) 1H09 1H10 YoY (%) 2010F Achv (%)
Revenue 680 886 30.3 1,449 1,566 8.0 3,552 44.1
COGS ((356)) ((460)) 29.2 ((844)) ((816)) ((3.3)) ((1,847)) 44.2
Gross Profit 325 426 31.1 602 750 24.5 1,705 44.0
Operating Profit 233 337 44.6 398 571 43.4 1,172 48.7
Pre-tax Profit 225 338 50.2 406 564 38.9 1,190 47.4
Net Profit 168 250 48.8 287 418 45.8 893 46.8

Source: Company, Recapital Securities

Volume (tons / 000 seeds) Volume (tons / 000 seeds)

Q1 2010 Q2 2010 Growth 1H 2010 1H 2009 Growth
Palm product
CPO 69,265 89,992 29.9% 159,257 164,265 -3.0%
PK 16,060 22,801 42.0% 38,861 41,692 -6.8%

Rubber 4,843 4,882 0.8% 9,725 11,189 -13.1%

Seeds
OP seeds 3,443 3,930 14.1% 7,373 1,798 3.1

Tea 368 463 25.8% 831 663 0.3

Cocoa 89 316 255.1% 405 849 -52.3%

Source: Company, Recapital Securities

Net Profit Margin
Operating Profit Margin
60% 50%
49% 41%
43% 40% 34%
34% 37% 28%
40% 32% 30% 24% 22%
20%
20%
10%
0% 0%
2008A 2009A 2010F 2011F 2012F 2008A 2009A 2010F 2011F 2012F

ROE 
P/E Ratio
15 13.3 40.0%
11.8 32.1% 33.0%
29.0% 30.7%
9.8 9.6 30.0%
10 8.0 18.6%
20.0%
5
10.0%

0 0.0%
2008A 2009A 2010F 2011F 2012F 2008A 2009A 2010F 2011F 2012F

Source: Company, Recapital Securities

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 Friday, September 03, 2010

Income Statement
In Rp Billion 2008A 2009A 2010F 2011F 2012F
Net revenue 3,846 3,200 3,840 4,569 5,392
COGS (1,985) (1,809) (2,035) (2,376) (2,750)
Gross Profit 1 861
1,861 1 390
1,390 1 805
1,805 2 193
2,193 2 642
2,642
Operating expenses (546) (372) (576) (640) (701)
Operating profit 1,314 1,019 1,229 1,554 1,941
Interest income (21) (19) (77) (137) (216)
Gain on sale of fixed assets 0 0 0 0 0
FX gain (loss) 30 15 0 0 0
Interest expense (43) (53) (53) (25) 16
Other income (expense) 4 8 0 0 0
Total other income (expense) 12 (11) 24 112 231
Equity in net income of associates 0 0 0 0 0
Pre tax Profit 1 327
1,327 1 008
1,008 1 253
1,253 1 665
1,665 2 172
2,172
Tax income (399) (301) (376) (500) (652)
Minority interest 0 0 0 0 0
Net profit 928 707 877 1,166 1,521
EPS (Rp) 682 525 651 866 1,129
Deviden 150 308 163 216 282
PER (X) 10 13 12 9 7

Balance Sheet
In Rp Million 2008A 2009A 2010F 2011F 2012F
Cash & equivalent 1,034 682 1,200 3,301 3,853
Short term investments 0 0 0 0 0
Accounts receivable 112 77 93 111 130
Inventories 214 192 216 252 292
Others 40 13 13 13 13
Current Assets 1,400 964 1,522 3,677 4,288
Long term investment 0 5 5 5 5
PP&E 1,752 2,057 2,714 3,450 4,265
Acc. depreciation 374 453 564 696 852
Other non
non-fixed
fixed assets 2 154
2,154 2 279
2,279 2 279
2,279 2 279
2,279 2 279
2,279
Non current Assets 3,532 3,888 4,434 5,039 5,698
Total aset 4,932 4,852 5,956 8,716 9,986
Accounts payable 177 93 104 121 141
Taxes payable 157 82 102 136 178
Others 519 512 512 512 512
Current Liabilities 853 686 718 769 830
Long term debt - net of current maturities: 617 31 106 1,941 2,010
Others non current liabilities 265 322 322 322 322
Non Current Liabilities 881 353 428 2,263 2,332
Total Liabilities 1,734 1,039 1,146 3,032 3,162
Minority interest in equity of subsidiaries 0 0 0 0 0
Paid-up capital 682 682 593 593 593
Paid in excess 888 1,030 1,458 1,458 1,458
Retained earnings 15 30 688 1,562 2,702
Others 1,612 2,071 2,071 2,071 2,071
Total Equity 3,197 3,813 4,809 5,684 6,824
Total Liabilities & Equity 4,932 4,852 5,956 8,716 9,986

Cash Flow
In Rp Billion 2008A 2009A 2010F 2011F 2012F
Net income 928 707 877 1,166 1,521
Depreciation & amortization 60 79 111 132 156
Others 133 94 0 0 0
Cash flow from operations 1,121 881 988 1,298 1,676
Capex (531) (608) (768) (868) (970)
Increase in long term investing 4 9 0 0 0
Others (81) 68 2,279 2,279 2,279
Cash flow from investing (608) (531) 1,511 1,411 1,309
Changes in debt (31) (1,349) (75) (1,835) (69)
Others (6) 647 (322) (322) (322)
Cash flow from financing (37) (702) (398) (2,157) (391)
Cash surplus (deficit) 476 (352) 2,101 552 2,594

Source: Company, Recapital Securities

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Reseach Team

Pardomuan Sihombing Head of Research pardomuan.sihombing@recapital.co.id

Agustini Hamid Reseach Analyst tini@recapital co id

tini@recapital.co.id

Mardiana Research Assistant mardiana@recapital.co.id

Recapital Securities
Recapital Building
Jl. Adityawarman Kav. 55, 10 – 11th Floor
Jakarta 12160,, INDONESIA
Phone : (021) 2702277 (Hunting)
Fax : (021) 7246881

INVESTMENT RATINGS: Indicators of expected total return (price appreciation plus dividend yield) within the 12-month
period from the date of the initial rating, are: Buy (10% or higher), Neutral (-10% to10%) and Sell (-10% or lower).

Disclaimer:
isclaimer:
The document is for information only and the use of the recipient. It is not to be reproduced or copied or made available to others.
Under no circumstances is it to be considered as an offer to sell, or solicitation to buy any security. While the information contained
herein is from sources believed reliable, we do not represent that it is accurate or complete and it should not be relied upon as such.
We, or our affiliates, may from time to time have positions in, or options on, and buy and sell securities referred to herein. We, or our
affiliates, may from time to time solicit from, or perform investment banking or other services for, any company mentioned in this
document. Distributed by PT Recapital Securities.

Our report is also available at Bloomberg, RCSA <GO>

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