Petra

Petra: DMG initiates at Buy with DCF-based TP of $4.50. Says, at a time when MNCs are craving to get a foothold in Indonesia’s chocolate confectionery market, Petra is showing no signs of relinquishing its dominant 53% market share. Following the divestment of its upstream cocoa ingredients business, Petra is now an even purer play to rising consumption spending in ASEAN. The house believes a premium to its Indonesian peers is justifiable for its excellent management track record and purer exposure. Expects a 3-year net profit CAGR of 15.6% from FY14-16e, with potential upside from IDR strength. Ongoing litigation with Barry Callebaut (BARN SW, NR) is a risk, but the house believes this will likely have no major impact on the company even in the worst-case scenario.