Company Profile Sampoerna Agro and Overview Indonesian Palm Oil Sector

In the first quarter of 2014, Sampoerna Agro recorded a 141.0 percentage point (year-on-year) growth in net profit to IDR 55.4 billion (USD $4.7 million), from IDR 22.9 billion in the same period in 2013. Profit in the first quarter was supported by the higher palm oil price. Meanwhile, the company’s revenue grew 10.9 percent from IDR 585.5 billion to IDR 649.6 billion (USD $55.1 million) over the same period.

Brief Introduction to Indonesia’s Palm Oil Industry

Indonesia is one of the world’s most important players in the palm oil industry. Currently, Indonesia is the world’s largest palm oil producer as well as exporter, followed by Malaysia. In 2013 Indonesia, Southeast Asia’s largest economy, produced about 28.3 million tons of crude palm oil (CPO), accounting for about half of the world’s total output, and exported 66 percent of this output. Regarding consumption, Indonesia consumed around 6.9 million tons of CPO in 2013, second only to India (7.3 million tons), the world’s largest CPO buyer.

The palm oil industry is a key industry for Indonesia’s economy, both as an upstream product (crude palm oil) to downstream products such as cooking oil. Apart from being an important foreign exchange earner, cooking oil is also a key factor in determining the inflation rate for the Indonesian economy. The upstream industry (CPO production) leads growth of the palm oil industry sector, while the downstream industry (i.e. crude palm oil refinery) plays an increasingly important role in the development of the industry. The majority of Indonesian-produced CPO is exported. Traditionally, the domestic market mainly consumed CPO in the form of cooking oil. However, the Indonesian government imposed several regulations in favour of more domestic consumption, in order to promote downstream processing that should result in value-added products. One example is preferential progressive export duties on its downstream derivatives providing stimulus for processing. Another example is the recently elevated level of biofuel blending mandate late last year.

Sampoerna Agro Stock Quote:

Sampoerna Agro's Financial Highlights:

	2008	2009	2010	2011	2012	2013
Sales	2,288.1	1,815.6	2,311.7	3,142.4	2,986.2	2,560.7
Gross Profit	773.9	599.4	842.6	1,060.8	793.0	498.1
Operational Income		417.1	649.4	748.8	486.6	236.2
Net Profit		281.8	451.7	540.9	329.2	119.1
EBITDA	697.0	548.2	756.7	876.0	670.3	440.4
Total Assets	2,156.2	2,261.8	2,875.8	3,411.0	4,137.7	4,512.7
Total Liabilities	578.0	475.0	716.6	911.5	1,470.8	1,814.0
Earnings per Share¹	236	151	239	286	174	63
Dividend per Share¹	147	90	45	108	87	45

^{in billion IDR rupiah unless stated otherwise
¹ in IDR rupiah
Source: Sampoerna Agro, Annual Report 2013}

Future Projection Sampoerna Agro's Financial Highlights:

	2012	2013	2014F	2015F	2016F
Sales	2,986.2	2,560.7	3,417.0	3,722.0	4,003.0
Net Profit	329.2	119.1	332.4	416.7	355.3
EBITDA	670.3	440.4	826.1	985.0	931.2
P/E Ratio (x)	13.49	45.49	13.97	10.97	13.0

^{in billion IDR rupiah unless stated otherwise
Source: CIMB Securities}

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