PT Astra Agro Lestari Tbk (AALI) succeeded in strengthening financial performance in 2020.

This surge in performance is expected to continue until this year in line with the solid selling price of crude palm oil (CPO), so the Astra group's plantation shares are still worthy of being looked at.

BRI Danareksa Sekuritas analyst Andreas Kenny said Astra Agro's core profit last year jumped 137.9 percent to Rp1.1 trillion, exceeding BRI Danareksa Sekuritas' estimates. The price hike was supported by strengthening the CPO selling price, which reached 26.2% to Rp8,500 per kilogram last year, even though the Covid-19 pandemic hit the world and Indonesia.

"The realization of this net profit is equivalent to 11.8% higher than our target of 2020 net profit. This has prompted us to maintain our recommendation to buy AALI shares with a revised target price up to Rp17,500," he said in his research.

With this surging profit coupled with the strengthening trend of palm commodity selling prices, BRI Danareksa Sekuritas chose to revise this year's net profit target from Rp1.18 trillion to Rp1.32 trillion.

Meanwhile, the sales projection was revised down by 6.5% from Rp21.84 trillion to Rp20.42 trillion.

According to Andreas, the revised upward price target is in line with the increase in the CPO selling price target this year from an initial average of MYR2,900 per ton to MYR3,200 per ton. The expected weather conditions are still good, making the purchase price of fresh fruit bunches (FFB) lower and the effective tax lower.

"Last year, the company booked an increase in core net profit from Rp466 billion to Rp1.10 trillion," he explained.

Meanwhile, the company's revenue rose from Rp17.45 trillion to Rp18.80 trillion. The net profit realization reflects 83.55% of BRI Danareksa Sekuritas' target. Meanwhile, the revenue figure reflects 91.6% of Danareksa Sekuritas' target and 102.1% of the analyst's consensus estimate.

BRI Danareksa Sekuritas targets an increase in Astra Agro's net profit to Rp1.32 trillion in 2021, compared to last year's Rp833.1 billion. Likewise, income is expected to increase this year from Rp18.80 trillion to Rp20.42 trillion.