Part of the Credit Suisse report.

CREDIT SUISSE yesterday (Jan 8) said it has switched its top pick for the Indonesian palm oil sector to Indofood Agri from
PT Astra Agro Lestari Tbkies.

It reiterated its ‘Outperform’ rating and S$0.70 target price.

Credit Suisse noted that IndoAgri was trading at a discount to peers, and at the lowest 2009 PE multiple among all palm oil counters under the broker's coverage, and at the lowest multiple to its mature plantation assets.

Palm oil fruit

eddy Oetomo, the broker’s research analyst, added that IndoAgri is a laggard play, achieving only 5% rise in its share price (recently 63 cents) in the past 2 months versus an average of 18.5% for crude palm oil (CPO) counters under the broker's coverage.

Teddy also said IndoAgri shares are trading at the bottom-end of historical valuation range at only 5.4X PE ratio.
In addition, IndoAgri was trading at a 20% discount to London Sumatra Indonesia in both 2009E P/E
and EV/mature nucleus ha.

Given that IndoAgri owns London Sumatra and with its plantation areas outside London Sumatra are of better quality, “we believe there is no justification for IndoAgri to trade at such a wide discount to London Sumatra.”

IndoAgri closed unchanged yesterday at 61.5 cents.

A check with Bloomberg showed a wide spread of target prices, ranging from 35 cents to $1.65.

Source: Bloomberg

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