AKR, Fuelling ahead, CLSA

AKR reported a strong FY11 result, with in line with CL estimates and 5% ahead of consensus. Revenue grew 82% and profit 142% YoY driven by a 50% increase in fuel volumes. The company remains well positioned in a growing industrial fuel consumption market and presents a unique option on retail fuel deregulation. Re-iterate BUY with Rp5,000/sh target price, implying 27% upside.

AKR, Oil, Deregulation Tailwinds, CLSA

Fuel distributor and logistics play AKR is a direct beneficiary of higher fuel prices. The company’s 25% 3 year fuel volume CAGR is driven by unsubsidised fuel sales to industrial customers. AKR is in a prime position to benefit from an eventual end to fuel subsidies in Indonesia and its plans to enter coal logistics create value. Despite its small cap status, AKR has been recognised for its high corporate governance. On the back of these tailwinds we raise our target price to Rp5,000 and rec to BUY.