Feb 27, 2011

Indo listed palm oil companies

Palm oil producer PT Astra Agro Lestari Tbk (AALI), in term of planted area, is 3 and 5 folds larger than PT PP London Sumatra Indonesia Tbk (LSIP) and PT BW Plantation Tbk (BWPT). But, BW Plantation is a palm oil company with the highest profitability.    
Find out the just released of FY 2010 financial statement at Indonesia Stock Exchange (IDX). BW Plantation recorded the highest both gross margin and operating margin last year, followed by London Sumatra, and Astra Agro.
It is simple. Look at their immature areas. BWPT last year managed 52,060 hectares of palm oil planted area, where mature area counted 15,270 hectares or 29.33% and 70.67% or 36,790 hectares were immature area. 
Of palm oil area of 80,372 hectares, LSIP's mature area counted 68,583 hectares or 85.13% and 11,789 hectares or 14.66% were immature. In Astra Agro, based on a public expose material published in March last year, with 264,800 hectares, mature area took 207,900 hectares or 78.51% and the remaining of 56,900 hectares or 21.49% were immature. The larger immature area means the faster the company will grow.
Financial performance 
BW Plantation's net income last year recorded Rp244.73 billion, a 46.1% increase from Rp167.47 billion in the previous year. London Sumatra also made the same increase in its bottom line. LSIP posted Rp1.03 trillion, about 4 folds larger than BW Plantation's bottom line, a 46.1% rise from Rp707.5 billion in 2009. Compared to them, Astra Agro posted the smallest growth in bottom line. AALI booked Rp2.02 trillion net income, 2 folds larger than LSIP, a 21.69% increase from Rp1.66 trillion.
At the operational line, BW Plantation, with the largest of immature area, posted a 43% increase in operating profit to Rp370.14 billion from Rp258.86 billion, sending a steep jump in operating margin to 51.9% from 44.3%. The highest operating margin reflects BWPT's ability to maintain its cost efficiency. 
Gross profit grew 27.1% to Rp463.85 billion from Rp365.02 billion,  sending gross margin surpassing 65% from 62.5%. Sales rose 22.09% to Rp712.59 billion from Rp584.11 billion
London Sumatra booked 37.47% increase in operating profit to Rp1.39 trillion from Rp1.02 trillion. Its operating margin rose to 39% from 31.8%.
Gross profit increased 27.4% to Rp1.77 trillion from Rp1.39 trillion, enabling LSIP to boost gross margin to 49.3% from 43.5%. Sales improved 12.3% to Rp3.59 trillion from Rp3.19 trillion.  
Astra Agro's operating profit improved 14.56% to Rp2.99 trillion from Rp2.61 trillion. But, the company failed to maintain its operating margin which fell to 33.82% from 35.18%.
AALI's gross profit advanced 16.45% to Rp3.61 trillion from Rp3.10 trillion. However, gross margin slightly decreased to 40.84% from 41.78%. Sales rose 19.14% to Rp8.84 trillion from Rp7.42 trillion.
In term of profitability, BWPT and LSIP enable to jack up gross and operating margins. Despite growth performance, AALI was unable to maintain its gross and operating margins. 

Disclosure: No position at the stock mentioned above.

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