Jun 04, 2016 18:41:54
Astra Agro Lestari ($AALI), Overhang From Rights Issue Should Disappear

Astra Agro just announced the exercise price and the number of new shares for its rights issue, which we think should eliminate the overhang in its share price. It would do rights issue with the ratio of nine old: two new shares with an exercise price of IDR11,425, which would dilute its FY16F and FY17F EPS by 9% and 16% respectively. Cum-rights date is 6 Jun 2016. We reiterate our BUY call with a lower IDR17,800 TP on Astra Agro, which we view as a laggard play. Our revised TP is based on an unchanged 16.4x P/E target on diluted FY16F EPS.