Small/Mid Cap Strategy and Stock Picks - the DBS Vickers ...

Regional Small/Mid Strategy Q2 2008
Tunas Baru Lampung
Bloomberg: TBLA IJ | Reuters: TBLA.JK
BUY Rp445 JCI : 2,419.6
Price Target : 12-Month Rp780
Potential Catalyst: Higher than expected 2007 results, higher crude oil
price and CPO price recovery.
Analyst
Herry Dion Mahargono +6221 3983 2668
herry.mahargono@id.dbsvickers.com
Price Relative
Rp
701.90
601.90
501.90
401.90
301.90
201.90
101.90
Relative Index
2004 2005 2006 2007 2008
Tunas Baru Lampung (LHS) Relative JCI INDEX (RHS)
Forecasts and Valuation
FY Dec (Rp bn) 2006A 2007F 2008F 2009F
Turnover 1,194 1,566 2,249 2,207
EBITDA 224 304 419 499
Pre-tax Profit 79 125 217 255
Net Profit 53 87 152 179
Net Pft (Pre Ex.) 53 87 152 179
EPS (Rp) 12.8 21.2 36.8 43.3
EPS Pre Ex. (Rp) 12.8 21.2 36.8 43.3
EPS Gth Pre Ex (%) 749 65 74 18
Diluted EPS (Rp) 11.6 19.2 33.4 39.3
Net DPS (Rp) 3.8 6.3 11.0 13.0
BV Per Share (Rp) 209.6 224.4 250.1 280.5
PE (X) 35.5 21.5 12.4 10.5
PE Pre Ex. (X) 35.5 21.5 12.4 10.5
P/Cash Flow (X) 16.5 10.5 6.9 5.7
EV/EBITDA (X) 9.3 7.7 5.8 5.2
Net Div Yield (%) 0.8 1.4 2.4 2.9
P/Book Value (X) 2.2 2.0 1.8 1.6
Net Debt/Equity (X) 0.3 0.5 0.6 0.6
ROAE (%) 7.7 9.7 15.5 16.3
Consensus EPS (Rp):
Sector : Consumer Goods
Principal Business: Planatation
219
199
179
159
139
119
99
79
59
39
24 31 42
The laggard
Story: Tunas Baru Lampung (TBLA) guided that FY07
net profit could reach Rp.100bn (+88% y-o-y), or 15%
higher than our forecast. This would be led by strong
commodity prices, mainly CPO, as CPO production fell
c.12% y-o-y due to adverse weather. Recently, the
company acquired 45,000ha land in West Kalimantan.
We view this positively because it allows the company to
grow amid intensifying competition for plantation land.
Point: We remain optimistic of CPO prices, backed by a
foreseeable critically low supply of oilseeds worldwide in
2008/09 and persistently high crude oil price. As such,
we expect the company to book a robust performance
again this year on the back of stronger CPO price
coupled with solid volume growth due to normalized
weather and young tree profile. TBLA expects FFB
production to nearly double in 2009 due to its young
trees. And as a fully integrated company, TBLA is in a
better position to cushion against lower CPO price
compared to pure upstream players.
Relevance: TBLA is currently trading at 13.3x and 11.3x
2008-09 (FD) PER compared to the broader market’s
14.5x and 11.9x, respectively. Our target price of Rp780
is derived based on DCF valuation with WACC of 12.5%
and 6% terminal growth rate. Our target price implies
EV/ha (nucleus only) of US$10,400.
At A Glance
Issued Capital (m shrs) 4,167
Mkt. Cap (Rpbn/US$m)
1,854 / 202
Major Shareholders
Sungai Budi (%) 19.6
Sungai Budi Perkasa (%) 14.6
Budi Sulfat Jaya(%) (%) 15.0
Free Float (%) 50.8
Avg. Daily Vol.(‘000) 25,497
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Refer to important disclosures at the end of this report