Stock Name: IndoAgri
Company Name: INDOFOOD AGRI RESOURCES LTD.
Research House: Phillip Securities
“Previously we actually used a gross margin of 30% for both FY11E and FY12E, but we are revising up the margin to 35% for both years, as we noted that the gross margin has grown and stayed relatively stable around 35% in the last 3 years.”
Company Name: INDOFOOD AGRI RESOURCES LTD.
Research House: Phillip Securities
Phillip Securities upgrades Indofood Agri Resources (5JS.SG) to Buy from Hold, and cuts its fair value to $2.73 from $2.91.
The house notes IFAR has grown in scale over the last five years, tripling its plantation size of 66,900 hectares in FY2006 to 205,000 hectares in FY10.
The house notes IFAR has grown in scale over the last five years, tripling its plantation size of 66,900 hectares in FY2006 to 205,000 hectares in FY10.
“Previously we actually used a gross margin of 30% for both FY11E and FY12E, but we are revising up the margin to 35% for both years, as we noted that the gross margin has grown and stayed relatively stable around 35% in the last 3 years.”
The house revises up its FY11 and FY12 core earnings estimates by 2.8% and 3.0% respectively to IDR1,384 billion and IDR1,368 billion, arriving at its new DCF-based target using a cost of equity of 10.54%.
“Given the current trading price, we are seeing a potential upside of 20.9% and hence we are upgrading the call to a Buy.”
Shares are down 0.9% at $2.28.
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