28/07/2011 (Jakarta Globe) - Plantation companies including Astra Agro Lestari and BW Plantation reported a surge in first-half profits, suggesting other producers of crude palm oil are likely to meet or exceed analysts’ estimates.

“I believe most plantation companies are on track to meet their full-year target. Some of them may even beat consensus expectations,” said Hariyanto Wijaya, plantation analyst at Mandiri Sekuritas in Jakarta.

Plantation companies are set to benefit from the increased price of crude palm oil during the first half of the year. The average selling price jumped 22 percent to Rp 8,013 per kilogram during that time compared to the same period last year, Hariyanto said.

First-half net income at Astra Agro Lestari, the plantation unit of Astra International, doubled to Rp 1.32 trillion from the same period last year. The growth was supported by a higher volume of sales combined with an increase in price. Astra Agro’s sales volume grew 19 percent to 567,000 tons from a year before.

The company’s earnings are likely to meet Mandiri Sekuritas’s projection for the full year, Hariyanto said. First-half profit is 49 percent of the broker’s estimate for the whole of 2011, he said.

Net income at BW Plantation, a smaller plantation company, nearly doubled to Rp 171 billion in the first six months of the year. Kelik Irwantono, the company’s corporate secretary, said growth was supported by cost control and an increase in sales.

The volume of crude palm oil sold rose 35 percent to 53,000 tons, while the average selling price at BW Plantation was Rp 7,765 per kilogram, up 19 percent, Kelik said.

Those figures have caught the attention of brokers, some of whom have raised their valuations on the company’s stock.

“Results in the first half are better than our expectations, accounting for 56 percent of our full-year earnings estimate this year,” Kim Eng Securities said in a note to clients.

Hariyanto also said there was still potential upside in the sector for the rest of the year, and that some companies, including Sampoerna Agro, London Sumatra Plantation and Jaya Agra Wattie, are still undervalued.

“Year to date, the index for agricultural companies has increased 6.4 percent, while the Jakarta Composite Index has increased 12.4 percent,” he said.

Hariyanto expects the newly listed plantation company Jaya Agra Wattie to reach Rp 131 billion in net income in the first half, which is about 76 percent of Mandiri’s full-year expectation of Rp 207 billion.