Opening New Milestones to Fuel Growth
Key Takeaways :
▪️ STAA is currently focused on three organic expansion agendas: 1) increasing the capacity of the kernel crushing plant (KCP) plant; 2) adding oil mills in Central Kalimantan; and 3) establishing a midstream refinery and fractionation plant. These expansions are expected to provide growth opportunities for the company by enhancing its revenue streams.
▪️ STAA's age profile is younger than that of its peers in our universe (12.5 years in FY23). As a result, STAA has consistently managed to produce higher FFB yield nucleus compared to its peers, reaching 23.5x in FY23 (vs peers: 17.4x).
▪️ In our moderate scenario, we project STAA’s revenue to achieve a CAGR of +4.9% to IDR6.7 tn by FY28F. This projected growth is primarily driven by the expansion of STAA's KCP. We also estimate STAA's net profit to achieve a CAGR of +9.1% by FY28F, with an anticipated NPM of 15.7%. This projected growth is mainly fueled by our expectation of manageable operating expenses as well as a decrease in finance costs.
▪️ We used a blended approach incorporating DCF (70%) and EV/ton (30%). We assigned a greater weight to DCF to account for the company's future performance potential, while EV/ton reflects industry performance. We arrive at a BUY recommendation for STAA with a TP of IDR910/share (indicating a potential upside of 26%), implying a PE of 13.7x/11.2x and PBV of 1.9x/1.7x for FY24E/FY25F.
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