CPO industry is growing rapidly thanks to Biodiesel

CPO industry is growing rapidly thanks to Biodiesel

The increase mandatory biodiesel content in biodiesel for the entire sector about 20 % , from the previous 7.5 % boost CPO increased consumption of 1.8 million tons or 3.2 % of world palm oil production .

Samuel Securities researcher Joseph Pangaribuan explained , during this , the mandatory use of biodiesel has never been realized in full. However , realization of the mandatory levels continue to rise . On the other hand , the installed capacity of biodiesel plants currently account for 4.8 million tons making enough to support the plan to increase the production of biodiesel .

" Revision of regulations mandatory biodiesel , we expect Indonesia will increase biodiesel production to 3.4 million tons in 2014 , up 1.6 million tons from the year in which almost the entire source of the increase came from domestic demand , " according to research by Samuel November 2013 .

Indonesian biodiesel exports , Samuel predict relatively similar to this year in line with the policy of import duty hike biodiesel from Europe which is 90 % biodiesel market share of Indonesian exports . Asuk duty hike as a result of the alleged dumping of biodiesel made ​​by Indonesia .

Meanwhile , with a ratio of 1:1,025 against palm oil biodiesel production , the consumption of palm oil for biodiesel production Indonesia will reach about 3.4 million tons .

" Al results , we raise the CPO price assumption for next year to U.S. $ 950 per ton , up 5.5 % from the previous assumptions , " he added .

The increase in CPO price assumption of 5.5 % , the average impact on the net profit increased by 15.7 % and 11.3 % from the previous projection . Meanwhile , compared to this year , growth in EPS in 2014 increased by 278 % which is also factoring the increase in the rupiah depreciation where the average rupiah exchange rate next year is estimated at Rp11.500 , down 9.5% .

Despite the significant increase in EPS next year is not much different from 2012. PT PP London Sumatra Plantation Tbk ( LSIP ) , PT Sampoerna Agro Lestari Tbk ( SGRO ) , and PT Salim Inovas Tbk ( SIMP ) with hold recommendations , while PT Astra Agro Lestari Tbk ( AALI ) with a buy recommendation price target Rp26.000 .

Next year , capital expenditure plans AALI around Rp 3 trillion , lower than this year's Rp 3 , 5 trillion . The capital expenditure will be used to finance the construction of refined and new plant and replanting .

" However , we estimate AALI will not finance the capex through like bank loans this year , due to the significant additional cash due to higher CPO prices and the impact of the weakening rupiah , " he added .

Samuel Operationg cash flow estimate could reach Rp 3, 7 trillion in the next year . Samuel also raise AALI net income in 2014 and 2015 , respectively 10 % and 12 % .

Compared company CPO , the worst LSIP decreased gross margin in the first nine months of this year , where the gross margin fell by 1.57 bps . The reason is the increase in fertilizer variations where LSIP stated this increase to increase yields in the future .

On the other hand , the results show the company's channel check CPO besides LSIP not many would dare to add or replace fertilizer variation over time as a result does not fix the yield per hectare .

" Therefore , using the assumption konservatid with gross margin of approximately 31 % in 2014 at the 46 % level pomfret which is an average of five years , " he added .

Target price around Rp1.600 reflect LSIP about 10.3 times 2014 PE , above average PE of seven years , which is 8.2 times .

Meanwhile , SGRO CPO production decreased 32% in the first nine months of this year the worst of the other plantation companies were only down 10 % . However , this deterioration is a five-year silkus SGRO gardens mainly in South Sumatra .

In the third quarter , production of CPO SGRO experienced a significant improvement in which increased to 46.5 % next year Samuel expect to experience a significant increase in production following the five-year cycle .

" We assume the sales volume will rise 32 % next year . Rp1.850 new target price , " he explained .

For SIMP , soaring palm oil prices have little effect because of the rising CPO price would raise the cost of production of edible oils and fats. In addition , Samuel suspect SIMP currently making adjustments to the sale price of cooking oil cooking oil competitors as oil prices are more expensive than competitors in the current trend of consumers increasingly sensitive to price .

Another problem faced by SIMP is the rising cost of fertilizer due to rising fertilizer variations where SIMP stated this increase to increase yields in the future .

" Compared to the upstream palm oil companies , profits rise SIMP smaller because the increase in CPO prices also lead to increase in some of the costs . Rp930 new target price , " he said . ( ANT )