Petrafoods

Petrafoods: NRA Capital view Petra’s recent proposed disposal of the entire cocoa ingredient division for US$950m (or about 22x FY12 EBITDA) to Barry Callebaut Belgium NV as compelling and positive. Tip that the proposed disposal will unlock value in the capital-intensive and relatively lower-yielding cocoa ingredient business, resulting in disposal gains of US$844.1m and net cash proceeds estimated at US$300m (or$0.60 per share) for capital re-cycling into a higher-yielding Branded Consumer business in high-growth markets of Indonesia and the Philippines. Armed with net cash, following the proposed disposal of Cocoa Ingredients, Petra now has strong resources to propel its Consumer Branded business into the next phase of growth. Valuing Branded Consumer at 18x PE (FY14F) (previously 18x PE (FY13F) and assuming further capital allocation of US$110m to grow the business, house arrive at a fair value of $3.93 (Long-Term Buy). As part of management plans to distribute part of the proceeds from the proposed disposal of Cocoa Ingredient to shareholders, shareholders is also likely to be rewarded with a special dividend in FY13.