Jan 11, 2017 10:58:27

AKR Corporindo: Company Meeting Key Takeaways
We’ve met with AKR Corporindo ($AKRA) last week on business update, results preview and to ask reasons behind its recent share price correction. Key Point from the meeting;
i. Indicative full year FY16F result is expected to be relatively flat YoY and in-line with consensus (IDR1.089 tril), 5% below our estimate. This is on the back of 5% lower petroleum volume distributed and slight lower margin/litre due to 1Q16’s bad result.

ii. Share price has corrected >15% since 3 weeks ago due to a Chinese individual, not fund, hinted it to be family office. cleaning off his holding in AKRA, it is already finished.

iii. Company targeted FY17F net profit of IDR1.3trn, about 20% EPS growth in FY17F due mainly to higher sales volume to coal mining sector, higher sales volume in retail distribution, and higher margin/litre, similar to FY15F. However, guidance to analyst is only 15% YoY, to be conservative.

iv. Interesting update with the JV with BP (50.01% AKRA, 49.99% BP), BP doesn’t have distribution network, AKRA doesn’t have good brand, hence the JV.