Sunday, May 8, 2011

Performance in-line with expectations - PT. Indofood Sukses Makmur Tbk

by Samuel Securities

· INDF recorded 16% revenue growth and 16% net profit growth YoY in 1Q11. Revenue was booked at Rp10.76 trillion and net income was booked at Rp736 billion.

· The company’s 1Q11 result performance is in-line with our projection. Revenue represents 25% and net income represents 24% from our FY11 projection.


· The company’s top line growth was driven by the increase in sales volume and higher ASP. CBP division contributed 43% to total revenue followed by 26.2% from Bogasari, 22.7% from Agribusiness, and 8.1% from Distribution.

· Noodle sales are the main revenue driver in the CBP group with 71% contribution to total revenue. Noodle division raised ASP by 8% in the January in order to pass through cost in respond to the higher commodity prices. As a result, the higher ASP was able to compensate the slight decline in volume.

· In 1Q11 the leading performer was Agribusiness division with 50.6% YoY revenue growth due to higher CPO and rubber prices, stronger edible oils and fats sales, and growth in sales volume that result in 37.5% growth from the total consolidated sales value.

· Meanwhile, Bogasari division EBIT margin declined to 8% while EBIT value also declined to Rp289.6 billion from Rp352.6 billion. The decline was caused by the rising wheat price that was reflected in the quarter and INDF also wanted to focus on volume to protect its market share. Thus, sales volume increased by 10.4% YoY to 592k tons.

· We believe that INDF still has potential to improve its profit as well as margin because Bogasari division may increase ASP if commodity prices continue to rise in order to pass-through cost. Furthermore, SIMP listing will be another catalyst towards the company.

Action & Recommendation:

 Currently, INDF is trading at 15.6x PE’11F and we maintain our recommendation and TP of Rp6,000 reflecting 16.7x PE’11F. BUY·


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