Sampoerna Agro, Inferior margin, CLSA

Sampoerna Agro (SGRO IJ), the fourth-largest plantation company by
planted area, would likely to see inferior margin compared to its peers,
particularly during strong CPO price environment. The fact that their
plasma production accounts for 40% of company’s plantation area would
translate to higher cost – of which about 70-75% of production cost still
come from FFB purchased. Re-initiate with U-PF on its inferior margin and
more volatile production.