BW Plantation, 1Q12: Strong y/y growth, Nomura

Earnings came in line with our and consensus estimates
1Q12 earnings made up 20% of our full-year forecasts and 21% of
consensus FY12 forecasts.

What do the results mean?
The results reaffirm our belief that BWPT will show strong earnings
growth in FY12. However, while our numbers are slightly higher than
consensus, our PB vs excess ROE valuation framework indicates that
there is not much room left to chase the stock at these levels.
1Q production growth is weak (+4% y/y) considering the >20% growth
that consensus expects for FY12. This is actually an industry-wide
problem, particularly in March, and we think production should normalise
from April onwards, but it does highlight that risks for BWPT are actually
biased on the downside since expectations are very high.


Any change to the guidance
No.

Likely impact on stock price
Neutral

Key numbers and take-aways
1Q12 q/q
 Earnings were down marginally (3% q/q) with higher ASPs more than
compensated by higher costs of goods sold for the quarter.
 Revenue increased sharply by 18% q/q driven by higher prices (CPO
and PK ASPs up 12% and 90% q/q respectively).
 The cost of goods sold almost doubled q/q (driven by higher cost for
plantations) resulting in a lower EBITDA (down 6% q/q) despite the
increase seen in revenue.

1Q12 y/y
 Earnings rose by a strong 52% y/y led by a sharp increase in sales
volume (CPO sales volume up 76% y/y). Revenue was up by 55% y/y
(despite a fall in ASPs).
 Strong sales growth was compensated by higher cost of goods sold
(doubled y/y), resulting in EBITDA margin contraction on a y/y basis.
 Operating cost per hectare was up 21% y/y, whereas the cost per mt
was up 79% y/y because of much lower FFB yield (down 35% y/y from
6.5 mt/ha to 4.2 mt/ha).

Download file : BWPT 20120423