Indofood Agri

Indofood Agri: UOB Kay Hian maintains Buy with $2.00 TP. House note that 1Q12 results within expectation. Expect more CPO production in the remaining quarters. Although CPO production of 190,000 ton (+8% yoy) in 1Q12 represented 20.9% of forecast, expect full-yr production of 909,700 ton (+9% yoy) to be achievable due to: a) the low seasonal CPO production in the first quarter, b) conversion of about 15,000ha of immature area to mature area, and c) the commissioning of a 40-FFB tonne/hour CPO mill in Kalimantan in 2Q12. Expect oil-palm new planting of 10,000-15,000ha to be achievable. With the focus to expand new plantings of palm oil and sugar plantations, mgt still targeting oil-palm new planting of 10,000-15,000ha for 2012 despite oil-palm new planting of only 699ha and replanting of 531ha in 1Q12. EBITDA margin for EOF division to normalise at 3-5% for 2012 and also top sugar business to book full rev in 2H12 with the harvesting season for sugar expected to start from mid-May to October, although still expecting insignificant rev contribution from the sugar business in the near future.