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DSNG

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 Author(s):  RyanDimitry 

• 9M24 net profit of Rp833bn (+66% yoy) was above ours/consensus at 74/77% (vs. 3Y avg of 64%) due to higher-than-expected CPO prices.
• 3Q24 net profit grew to Rp329bn (+133% yoy/+19% qoq) as GPM expanded (+619 bps yoy/+356 bps qoq) on higher CPO ASP.
• We maintain our Buy call with a higher TP of Rp1,300 to factor in a higher CPO price.

9M24 net profit came above ours/consensus due to higher CPO prices
9M24 net profit reached Rp833bn (+66% yoy) above ours/consensus estimates at 74/77% of FY24F (vs. 3Y avg of 64%) due to higher-than-expected CPO price. Revenue reached Rp7.2tr (+9% yoy) as growth in CPO ASP (+8%) was able to offset the decline in sales volume (-4% yoy). Gross profit also grew to Rp2.1tr (+30% yoy) as GPM expanded to 30% (+485 bps yoy) due to higher price.
3Q24 net profit increased on higher CPO ASP despite slow production
Net profit increased to Rp329bn (+133% yoy/+19% qoq) as GPM expanded with higher CPO ASP. Revenue reached Rp2.5tr (+12% yoy/flat qoq) as sales volume declined (-9% yoy/-1% qoq) but was offset by CPO ASP increase of +18% yoy/+1% qoq. Gross profit reached Rp807bn (+38% yoy/+12% qoq) as GPM improved to 33% (+619 bps yoy/+356 bps qoq) from higher CPO ASP. Its EBIT reached Rp555bn (+57% yoy/+14% qoq) as its EBIT margin increased to 22% (+649 bps yoy/+288 bps qoq).
CPO production declined along with sales volume despite ASP increase
Operationally, we saw a decrease in CPO production at -14% yoy/flat qoq to 147kt in 3Q24 while FFB production also declined by -14% yoy/-2% qoq to 509kt. FFB yield also declined to 18t/ha in 3Q24 from 21t/ha in 3Q23. In terms of sales volume, CPO sales also declined -9% yoy/-1% qoq to 144kt in 3Q24. CPO ASP rose to Rp12.8k/t in 3Q24 (Rp12.4k/t in 9M24), which was up 18% yoy/+1% qoq.
Reiterate Buy with a higher TP of Rp1,300
We revised up our FY24-26F earnings forecasts for

DSNG

by 6-12% to factor in the higher CPO prices, and lift our TP to Rp1,300 (vs. Rp1,100 previously); reaffirm Buy. Our new TP implies FY25F P/E of 8.0x (-1 SD of its 5yr mean). DNSG remains our preferred pick given its superior productivity, lower cost of production and diversified revenue profile and higher ESG score. Risks: CPO output/prices, weather conditions and regulations.


Sumber : IPS