Indofood Agri Resources

UOBKayhian on 9 June 2014

FY14F PE (x): 11.1
FY15F PE (x): 11.1
Production recovery post biological tree stress. Indofood Agri Resources’ (IFAR) FFB
and CPO production are expected to register a robust 3-year CAGR of 7% and 8% for
2013-16 to 3.59m tonnes and 1.01m tonnes respectively. The stellar CPO production
growth is mainly due to: a) high newly-mature area of 15,041ha, thanks to aggressive
new planting in 2010 (accounting for 8.2% of 2014 mature plantation), and b) FFB yield
recovery post biological tree stress to 17.1x in 2014 from 16.3x in 2013. Maintain
HOLD with a target price of S$1.01, based on SOTP valuation after implementing a
holding company discount of 25%. Entry price is S$0.78, based on -1SD to its 5-year
mean PE.