Stock Name: IndoAgri
Company Name: INDOFOOD AGRI RESOURCES LTD.
Research House: CIMB
CIMB in a May 23 research report says: "IFAR has announced that PT SIMP will be listed at Rp1,100 a share. We are negative as: (1) the offer price represents only 8x P/E; (2) earnings dilution is higher than expected; and 3) the implied value for IFAR is only $1.42 or 30% below its current share price.
"We are cutting our earnings forecasts to account for the shareholding dilution. We also cut our target price to $1.94, now based on 12x forward P/E, from $2.73 (14.5x), representing a 20% discount to our target for Golden Agri.
"We are disappointed with its plan to proceed with the listing despite the low offer price for SIMP. Potential de-rating catalysts are a stock overhang following the listing and higher-than-expected earnings dilution. DOWNGRADE TO UNDERPERFORM."
Company Name: INDOFOOD AGRI RESOURCES LTD.
Research House: CIMB
CIMB in a May 23 research report says: "IFAR has announced that PT SIMP will be listed at Rp1,100 a share. We are negative as: (1) the offer price represents only 8x P/E; (2) earnings dilution is higher than expected; and 3) the implied value for IFAR is only $1.42 or 30% below its current share price.
"We are cutting our earnings forecasts to account for the shareholding dilution. We also cut our target price to $1.94, now based on 12x forward P/E, from $2.73 (14.5x), representing a 20% discount to our target for Golden Agri.
"We are disappointed with its plan to proceed with the listing despite the low offer price for SIMP. Potential de-rating catalysts are a stock overhang following the listing and higher-than-expected earnings dilution. DOWNGRADE TO UNDERPERFORM."
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