Indofood Agri

Indofood Agri: CIMB note that 3Q13 earnings were broadly in line with consensus and house forecasts. 3Q13 net profit fell 52% yoy as weaker plantation earnings and higher forex losses overwhelmed maiden sugar earnings from Brazil. The main surprise was a maiden profit contribution of Rp50.2bn from its sugar assets in Brazil, though this was offset by an unexpected forex loss of Rp88.7bn due to a weaker rupiah against the US$. 3Q plantation earnings fell 24% yoy from a 6% decline in FFB production from nucleus estates and a 1% dip in average selling prices achieved for CPO. Its edible oils and fats division also posted weaker yoy and qoq earnings in 3Q as the group cut cooking-oil and margarine prices by 10% in Apr 13. House surprised by its Brazilian sugar’s contributions despite low international raw-sugar prices. This was, however, overshadowed by forex losses and lower FFB production from its nucleus estates. Expect 4Q earnings to be better, led by seasonally stronger plantation production and sugar contributions. As its sugar harvest season starts in May, the bulk of its sugar sales are typically realised in 2H. The house maintains it Underperform Call with $0.81 TP, though may review them after the group's briefing this morning.