Indofood Agri Resources

UOBKayhian on 31 Oct 2013

(IFAR SP/HOLD/S$0.89/Target: S$0.90)
FY13F PE (x): 21.7
FY14F PE (x): 13.7

Weak ASP and higher costs dragged net profit in 9M13. Indofood Agri Resources (IFAR) reported a 66.7% yoy decline in net profit to Rp296b in 9M13. This was due to: a) lower CPO ASP (-12.2% yoy), b) lower edible oils & fats sales volume (-3.9% yoy) but offset by higher sugar sales volume (+14% yoy) and a slight increase in CPO sales volume, c) higher production cost, d) forex loss of Rp93b in 9M13 (9M12: gain of Rp17b), and e) higher corporate tax rate. Net profit was below our and consensus forecasts.

Maintain HOLD and target price of S$0.90, or 13.7x 2014F PE, based on SOTP valuation and after a holding company discount of 25%. Entry price is S$0.75