Gozco (GZCO IJ) - CLSA Indo

Gozco's management team presented to a room that is 3/4 full. The stock is compelling on many levels including attractive valuations, a decent balance sheet, strong management, but most of all - fantastic growth profile.

Projected FFB production to double to 500tons by 2015
Growth is coming from 2 key drivers: (1) more planted area coming into maturity - 40% of planted area is still in the immature stage which will start coming into maturity over the next 3 years. By comparison, a plantation that has been operational for a long time typically has 20% of planted area which is in the immature stage. (2) new plantings will add about 6500-9000 ha per year to total planted area. Total planted area is currently 32k ha so the incremental new planting is significant in the next few years
Management suggests that once they get to 50k ha of planted area, they will hit a sweet spot and their growth will be fantastic. That's less than 3 years away. The company has a remaining 95k ha of unplanted landbank so there is plenty of room for long term growth
The company has grown by M+A, making an acqn nearly every year since 2003. The focus is now on organic expansion. But the interesting thought is whether they themselves will be acquired since it is no longer easy to acquire new landbank and Gozco has a lot
Gozco is trading on PE 11x FY1 vs sector avg of 15x. It is one of the cheapest plantations stock in the sector but possibly the one with the best growth profile