BISI's 1Q08 results are exceptionally good, thanks to strong sales of hybrid corn seeds. BISI sold 10,343 MT corn seeds in 1Q08 compared to 19,384MT in FY07.

1Q08 net profit: Rp124.5bn, +730% YoY. Net sales of Rp440, +182% YoY. GM jumped to 54.53% from 39.50% YoY. OM doubled to 41.31% from 20.21%.

The growth curve is accelerating. In the 1Q08 alone, BISI made almost as much as FY07. For the 4Q07, almost made as much as for the first 9M07.

Gaining market share in 1Q08: 79% for hybrid corn seed, up from 60%+ in 07. Adoption rate for hybrid corn seed had gone up from 25% in 06 to 43% in 07. BISI expects the adoption rate to go up to 55-60% in 08. The biggest potential upside: hybrid rice seed. BISI is the only maker of it in Indonesia. Rice is a matter of priority for the govt. Hybrid rice seed is new, adoption rate only 2% now. Plenty of upside. Indo govt expects 44% adoption by 2012, or 260% CAGR.

Revising up forecasts FY08: corn seed from 26k MT to 32k MT. 1Q08A: 10,343 MT. Average price forecast FY08 for corn seed from Rp24,750/kg to Rp30k/kg, actual 1Q08: Rp28,030/kg. Rice seeds from Rp29,332/kg to Rp35k/kg, actual 1Q08: Rp35,797/kg. Prices BISI charged in the 1Q08 exceeded their own forecast for 2010.

Seasonality factor: 1Q represents ~20% of sales (breakdown: 20%, 5%, 40%, 35% for 1Q, 2Q, 3Q, and 4Q respectively). This means BISI can make Rp600bn in FY08 before even assuming rice production volume picks up in 2H08(before even assuming rice production volume picks up in 2H08 (affected by flood in 1Q08). That means the stock could be trading on 22x 08 earnings. However, capacity can be an issue here.

rgds

alexander-faried
RELIANCE SECURITIES,TBK