Riset saham

Indofood CBP - Undervaluing pricing power; raising target price to Rp13,000

Value gap should narrow ICBP has underperformed the JCI by 18% ytd as the market has been too narrowly focused on the disappointing performance of non-noodle businesses (35% of sales but only 3% of EBIT).
However, we see value in ICBP, which we project to deliver stronger three-year profit growth than KLBF and UNVR but to which it trades at 28-51% PER FY15F discounts. ICBP’s strong pricing power, as proven by 13 price hikes of a cumulative 113% in the past eight years, the most among Indonesian consumer companies, enabled it to grow profit by a 20% CAGR (2009-13) compared to Tingyi’s 2% and Uni-President’s 7%, yet to which it is trading at 23-26% PER FY15F discounts.

Upgrading earnings forecasts by 2-8% – ahead of consensus
Despite the lower guidance, we upgrade our forecasts by 2-8% for FY14-15 earnings due to the higher-than-expected noodle price hike this year. Based on our current projections, ICBP should post a 17% net profit CAGR (2013-16F), faster than UNVR’s 12% and Uni-President’s -2% net profit consensus CAGR (2013-16F). ICBP is also a net beneficiary of a stronger IDR, which may come as a result of a favorable election outcome and a stabilizing macro economy.

Raising target price to Rp13,000 (from Rp11,500 previously);
reiterating Buy
We reiterate Buy on ICBP, our top pick in Indonesian consumer staples, with a new target price of Rp13,000 (the highest on the street), which we derive using a WACC of 11.5%, implying a 24.7x FY15F PER, in line with local and regional peer valuations. Risks: IDR depreciation, raw material prices, competition. Disclaimer ON

RISET CIMB 12 AGUSTUS 2014


1.Equity Strategy   | PDF
Navigating Asia – August 14: Running with a wounded bull
Long Term ASIA: OVERWEIGHT
Author(s): Jason TODD, CFA +852 2532 1123, Rohit SHARMA

We maintain a preference for the North Asian cyclical/value trade which we think has further to run. We are growing concerned that China might be closer to the end of its rally than the beginning and that additional stimulus will be needed to continue the uptrend. However, we are not prepared to fight policy makers, momentum and flows. It appears that North Asia has been a beneficiary of European concerns but an escalation in tensions will drive flows back to the US rather than towards Asia even if risks to Chinese growth have fallen. Across ASEAN, we are defensive, looking for both yield and quality. We prefer buying cheap in North Asia rather than relative cheap in SE Asia.



2.Strategy   | PDF
High expectations from Jokowi
Author(s): Erwan TEGUH +62 (21) 30061720, Peter P. SUTEDJA, CFA

We did a survey of investment professionals and incorporate a recent survey done by Kompas to gauge what investors and voters expect from Jokowi’s administration. There are many similarities and yet some priority differences between what the two groups expect, though both set the expectation bar pretty high. Only time will tell if Jokowi can deliver, though we believe the first 100 days would set the tone. Three significant areas are: 1) cabinet composition: anything with less than 50% professionals would disappoint; 2) fuel subsidy: anything less than a firm timeline on removal may not be received well; 3) 2015 minimum wage: it would give a hint on his willingness to reach out to investors; toning down the nationalistic rhetoric would also help.