Lonsum, Superior profitability, CLSA

We like London Sumatra (LSIP IJ) on its superior cost structure and
production growth profile. We expect to see company’s oil yield
improving to 4.5-4.8tons/ha in 2012-13, from 4.3tons/ha in 2011
supported by its continued infrastructure improvement coupled with
maturing age profile. Its Ebit margin also stands out at 41-42% range,
the highest amongst CPO companies under our coverage. We set our TP
at Rp3,600/sh, implying 13x 2013 P/E, 10% discount to Astra Agro. BUY.