Disclaimer

Disclaimer:-Please note that all such analysis is provided by way of information only. All of the information was and should be taken as having been prepared for the purpose of reference only and that none were made with regard to any specific investment objective, financial situation or the needs of any particular person who may receive the analysis. Any recommendation or advice that may be expressed in or inferred from such analysis therefore does not take into account and may not be suitable for your investment objective.

Friday, July 18, 2008

Indofood Agri Research Report

by CIMB-GK (18 July)

Recent developments suggest that regulatory risks for the sector have increased. This could limit planters' earnings leverage to CPO prices. If CPO prices continue to head higher, governments may levy higher taxes on planters to rein in inflation.

There is also an increasing risk that biofuel targets may be scaled back. Cosc pressures on planters are on the rise as fertiliser prices have more than doubled year-to-date.

We believe that CPO prices will most likely peak in 2008 as the high prices in the past three years have spurred new plantings of oilseeds and curbed demand growth in low-income countries.

We are cutting our EPS estimates by 3% to 8% for FY2008 to FY2010. We are lowering our target forward PER to 15x from 18x, to account for the less rosy outlook.

-Research Report by CIMB-GK (18 July)
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