Indofood Agri: Goldman Sachs adds counter into its Conviction Buy List. House note that despite rising CPO prices, the stock price has under-performed since reporting weak 3Q11 results. Believe earnings may rebound in 4Q11, and that IFAR benefits both from rising CPO prices (5% increase boosts 2012E EPS by 7%) and Indonesia’s export tax changes (benefits IFAR’s refining and plantations businesses).
IFAR’s 3 year (2010-13E) vol growth CAGR of 12% is the highest in the sector and house see strong LT growth potential from its large immature and unplanted landbank. Meanwhile, valuations are attractive, trading at 11% discount to NAV and 6.6X 2012E P/E. House reiterate Buy.
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