IndoAgri

IndoAgri: 2Q13 results reflect industry woes. Revenue dropped 11% yoy to Rp 3.36t, as higher sales volume of CPO was more than offset by lower ASP of key plantation crops (palm oil, rubber, sugar) and lower edible oils sales. Net profit plunged 74% to Rp 65.9b, hurt by gross margin compression to 16.1% from 28.9%, due to the adverse effect of lower ASPs, and further impact from higher pdtn cost arising from rising wages and newly matured plantations. Mgt tone on outlook is soft, noting the slowing down of economic growth particularly in China and Europe, slower biodiesel demand in Europe and expectations of stronger palm oil supplies in 2H13 and larger soybean harvests from the US have put significant pressure on commodity prices. IndoAgri trades at 27.7x annualized 1H13 P/E, 0.67x P/B.