Monday, February 28, 2011

Indofood Agri

Indofood Agri: CIMB upgrades to Outperform from neutral, post FY10 results briefing. Keeps TP at $3. Sees re-rating catalysts from a potential listing of its subsidiary PT SIMP (previously viewed as negative), stronger than expected output and increased sugar earnings (particularly from 2H11 onwards)…

On the proposed listing of 90%-owned PT SIMP which owns all of IFAR’s operating assets including the stake in Lonsum, mgt indicated that: 1) PT SIMP will remain a subsidiary of the group after the listing; 2) it plans to maintain the listing status of Indo Agri; and 3) the listing will be in the best interests of sh/h but more details can only be revealed when regulatory approvals are received…

CIMB views this, and the recent sale of treasury shares as well as an 8% stake in Lonsum, as part of its plans to unlock value for sh/h, and lower overall gearing, which would be positive in the mid-term…

On 2011 outlook, mgt maintains guidance for 5-10% pdtn growth, aided by improved FFB yields and more new mature areas. Mgt appears more optimistic on its edible oils and fats division due to lower price competition in the market. Industry players, including IFAR, have started to raise prices to pass on higher feedstock costs.

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