Indoagri

Indoagri: 3Q12 results were in-line. Rev at Rp3,541b, +7.9% yoy and -6.3% qoq and net profit at Rp258b, +22% yoy and flat qoq. Gross margin fell slightly to 30.1% vs 32% yoy. Result brings 9M12 rev to Rp10,521b, +11.7% yoy and net profit to Rp888b, -14.1% yoy. Stronger top line was principally the combined effects of higher sales vol of palm products and contribution from sugar operations. FFB nucleus and CPO in 9M12 growing 7% and 5% yoy to 2,158,000 tons and 639,000 tons respectively. While edible oil business achieved a 6% yoy sales vol increase in 9M12, supported by the expanded refining capacity. 9M12 gross profit declined 6.1% primarily attributable to lower ASP for plantation crops and higher cost of production. The decline was partly negated by higher profit contribution from Edible Oils & Fats Division and sugar operations. On a YTD basis, net profit declined 14.1% yoy mainly attributable to lower gross profit, higher operating expenses and lower foreign exchange gains. Going forward, grp note long term positive fundamentals for palm oil remain supported by consumption growth from emerging Asian economies, coupled with demand for biodiesel driven by govt mandates from Europe, Brazil and Argentina. Overall, expect Indonesia’s thriving food and beverage industry and population growth to sustain domestic demand growth for palm oil products.