Indofood Agri

Indofood Agri: good set of 1Q11 results, generally in line with consensus.
Net profit +66% yoy to Rp 514b, as gross margins expanded to 45.9% from 37.8% a yr ago. Revenue +38.6% yoy to Rp 2.9tr, mainly driven by higher commodity prices and sales volume for palm products and palm seeds as well as edible oils and fats products...

CPO prices averaged US$1,251/mt in 1Q11, +13% over 4Q10 average of
US$1,108/mt, and +39% over the FY2010 average of US$901/mt.
CPO production +14%yoy to 176k tons. FFB nucleus production and plasma production +13% and +29% yoy to 589k tons and 203k tons rptvly..

Mgt believes the positive fundamentals for palm oil are supported by tighter global inventory levels, as well as the improved global economic climate, underpinned by consumption growth from India, China, and demand for biodiesel driven by govt mandates in Europe. Also expects the demand for palm oil products in Indonesia to remain supported in the short to medium term by demand from the F&B industry and population growth...

Possible catalyst in PT SIMP listing, expected to IPO ~9 Jun on the IDX.
Stock trades at 13.3x P/E.
Pre results, the Street had a mix of Buy and Hold ratings with recent TP btwn $2.50-3.38.