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Whether CPO prices will go down further will depend on crude oil prices. If it stays above US$100 and above, then palm oil as biodiesel will be viable and in demand thus mitigating further price drop for crude palm oil prices. Of course the other factor will be world wide demand as well as its price relative to icompeting commodities like soya, corn. If prices of these commodities goes down then palm oil prices will corresponding follows. The other important factor for plantation company, is also their ability to diversify into downstream production and thus indirectly increasing the demand for palm oil. In the long run, I think this company like wilmar and golden agri is still worth investing in at current price.
with CPO prices correcting..will it be able to improve profitability?
investor38 ( Date: 14-Aug-2008 21:29) Posted:
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Looks like Indo agri will cheong cm. Recent sell down unwarranted. Dispel analysts downgrade.
PRESS RELEASE
IndoAgri’s 1H2008 net profit rose 263% to Rp1.3 trillion (S$185 million)
Group’s 1H2008 revenue up 132% to Rp6.1 trillion (S$903 million) with improved performance recorded across all business divisions soared 251% driven by acquisitions, organic growth and rising CPO prices
CPO sales volume increased from 134,731mt to 344,240mt
Sales of branded cooking oil increased by 18%
Gross margin improved from 24% in 1H2007 to 37% in 1H2008.
SINGAPORE – 14 August 2008 – SGX Mainboard-listed Indofood Agri Resources Ltd. (“IndoAgri” or “the Group”), a major vertically integrated agribusiness group and manufacturer of leading brands of edible oils and fats in Indonesia’s, has posted a 263% increase in its net profit attributable to shareholders to Rp1.3 trillion (S$185 million) for the six months ended 30 June 2008 (“1H2008”).
Group’s 1H2008 revenue increased 132% to Rp6.1 trillion (S$903 million), with higher sales registered across all business divisions. The improved performance was attributed mainly to positive contributions from the acquisitions of new subsidiaries (particularly Lonsum) in 2007, together with the higher volume growth and higher prices for Crude Palm Oil (“CPO”) and other edible oil products. In line with the strong revenue performance, gross profit soared 251% to Rp2.3 trillion (S$334 million) for the corresponding period while gross margin improved from 24% in 1H2007 to 37% in 1H2008.
Plantation division remains the core business, contributing around 90% of the operating profit. This division continued to post strong growth with revenue growing 344% in 1H2008, with CPO sales volume increasing from 134,731mt to 344,240mt and favourable CPO prices. Cooking oil and fats division continued to enjoy strong growth momentum, posting a revenue growth of 79% due to higher selling prices and 18% volume growth in branded cooking oil. The increase in the average selling price of copra and palm oil-based products have helped Commodity division to deliver a 42% revenue growth in 1H2008.
EBITDA recorded a 276% increase to Rp2.1 trillion (S$305 million), in line with the strong performances from all business divisions. This was achieved despite higher selling and distribution costs on higher Indonesia export tax rate and higher G&A expenses for the enlarged group.
The Group recorded a net profit after tax of Rp1.6 trillion (S$246 million) in 1H2008. The attributable net profit after tax was Rp1.3 trillion (S$185 million), up 263% for the corresponding period.
Mr Mark Wakeford, CEO and Executive Director of IndoAgri said, “We have achieved another set of strong results and improved margins as we continue to capitalize on our integrated agribusiness model. Most notable is the improved CPO production, and the 18% growth in our sales of branded cooking oil. Our focus remains on improving plantation yields, new planting program and cost efficiencies to ensure we remain a low cost producer. We also announced in July the completion of the refinancing of the Rp 4 trillion of bridging financing for the Lonsum acquisition, and our balance sheet remains strong with a net debt to equity ratio of 0.34. ”
80 Raffles Place, #22-23 UOB Plaza 2, Singapore 048624, Tel. +65 6557 2389, Fax. +65 6557 2387, www.indofoodagri.com
Company Registration No. 200106551G
INDUSTRY OUTLOOK
Palm oil is the most widely consumed edible oil in the world with 25% global market share in 2007. With 80% of the world’s palm oil supply coming from South East Asia, IndoAgri is poised to capitalize on the growing business opportunities through its leading market position in the region.
The recent fall in petroleum prices and higher CPO stock in Malaysia have led to a fall in CPO prices. Despite this, the outlook for palm oil demand remains positive mainly due to growth in China and India, and the growing demand for biodiesel.
The Group will continue to focus on optimizing cost of production, and increasing production of CPO and sales of branded edible oil products. This will ensure the Group is well positioned to face the challenges ahead.
Mr Mark Wakeford, CEO and Executive Director of IndoAgri said, “Despite the recent falling CPO prices, supply and demand fundamentals for CPO remain favorable. Capitalising on this growth potential, we plan to expand our oil palm planted area to 250,000 ha by end of 2010. We are investing in a new refinery in Jakarta to further capture demand growth in Indonesia for our branded edible oil products. Together this will further enhance our strategic position as a leading agribusiness player in the region.”
---The End ---
ABOUT INDOFOOD AGRI RESOURCES LTD.
Indofood Agri Resources Ltd (“IndoAgri”) is a vertically integrated agribusiness group with business operations that range from research and development in the breeding and cultivation of oil palms, to the milling and refining of crude palm oil, and the marketing and distribution of cooking oil, margarine, shortening and other derivative products. The Group also engages in the cultivation of other crops such as rubber, cocoa and tea.
At present, IndoAgri - owns a vast land bank of 407,171 hectares spread throughout the Indonesian archipelago. Of this, 168,456 hectares and 22,414 hectares are planted with oil palm and rubbers, respectively. Additionally, IndoAgri also has 3,364 hectares of other crops such as cocoa, tea and coconut. . The Group’s acquisition of PT PP London Sumatra Indonesia Tbk in Q4 2007 has also further strengthened IndoAgri’s market leader position in Indonesia’s palm oil industry.
IndoAgri has also recently completed the shares subscription in PT Lajuperdana Indah (representing a 60% interest), which will enable the Group to expand its existing agribusiness activities into the areas of sugar cane cultivation and processing. The sugar industry in Indonesia presents a new and attractive investment proposition with demand driven by factors such as population growth, rapid development of processed food and beverage industries and the continued expansions of sugar-based industries such as ethanol.
For more information please visit our website at: www.indofoodagri.com
Issued for and on behalf of Indofood Agri Resources Ltd
By Financial PR Pte Ltd
For more information, please contact:
Indofood Agri Resources Ltd
Ms. Mak Mei Yook, makmy@indofoodagri.com
Mr. Isaac Chow, chowcs@indofoodagri.com
Tel: (65) 6557 2389
Fax: (65) 6557 2387
Financial PR Pte Ltd
Ms. Kathy Zhang, kathy@financialpr.com.sg
Mr. Dave Tan, dave@financialpr.com.sg
Tel: (65) 6438 2990
Fax: (65) 6438 0064
80 Raffles Place, #22-23 UOB Plaza 2, Singapore 048624, Tel. +65 6557 2389, Fax. +65 6557 2387, www.indofoodagri.com
Company Registration No. 200106551G
How true. When it is a 2.38 we thinks its going to hit 3.00. Now that it is at 1.38 we wonder whether it is a bear trap!
ozone2002 ( Date: 14-Aug-2008 16:13) Posted:
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it all depends on the risk reward ratio, would it be better to invest if the price had run up 40% or when price had correct 40%... its all abt the risk u want to tolerate..
with human emotions..everyone get excited with prices running ...but feel dejected when prices correct downwards..
investor38 ( Date: 14-Aug-2008 16:04) Posted:
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Looking back this is probably the most volatile counter amongst the CPO stocks listed on STI. Can move up and down by about 20 to 30 cents at times. Volume generally much lower than GAR. Can be quite scary or rewarding depending whether you read the trend correctly.
ozone2002 ( Date: 14-Aug-2008 15:54) Posted:
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up 10c..close to 10% gain...
This fellow has also been grossly oversold, dropping a whopping 60% from its peak to 1.16( near its IPO price) within a few weeks. Should be posting excellent results like the rest. Good price to get into now. No enticement to buy. Just my opinion.
Wow.... what a day (-0.22) wa piang eh.... i was thinking of contra (long) this last few days by holding short term @ 1.68 and greed comes into my mind after seeing it get higher to 1.83 (thought will go higher high) last two days ago and now been force to hold the stocks ( T + 5 is up ).....Now fear comes into my mind... haiz... However no worries... company is still sound and profitable......
Is ok.. let's see how the recovery road is like for INDO... should see a uptrend after the selling force subsided. Again.... Question is when.... heaven knows... ha cheers
investor38 ( Date: 03-Aug-2008 21:14) Posted:
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So which Ang Mo broking house to believe? If there is such a big difference in opinion; it means that they don't know!
UBS starts Indofood Agri Resources at Neutral with $2.01 target. Expects margin contraction in 2009 due to higher costs. Forecasts 169% growth in net profit for 2008 on higher palm oil prices, increase in fresh fruit bunch production. But expects 4% fall in earnings for 2009 due to progressive export tax structure imposed by Indonesia, higher fertilizer costs. Notes 42% market share in branded cooking oil business in Indonesia means company stands to gain as country becomes more affluent, consumers switch to branded cooking oil.
Indofood Agri's recent share price fall opened up "buying opportunity," says Credit Suisse. Broker says outlook for crude palm oil (CPO) price continues to be positive as U.S. floods hit soy crop, palm oil at big discount to soy oil, China vegetable oil imports expected to increase, vegetable oil inventories generally still low. Says company's valuation looks attractive, notes shares trading at one of lowest PE multiples of all palm stocks under coverage; adds, historically company's shares rebound when it's 2 standard deviations away from mean, as it's at current levels. "We see the potential for rapid share price recovery due to risk for short-covering." Reiterates Outperform rating with unchanged $3.28 target price.
I really like the technical outlook for this counter. I'm expecting a trading range of 1.77-1.90 tomorrow.
plantation stocks coming back to life!
Indofood Agri heading higher, one of today's best performing palm oil plays after Company says in statement it has refinanced loans relating to acquisition of majority stake in Lonsum. Company refinanced US$160 million of loans in Apr, now refinanced remaining US$20 million, further facility of IDR2.4 trillion. DMG says impact hard to judge until interest rates of replacement financing known; "management have not advised us of the interest rates for the loans, as such, pending further information, we are maintaining our earnings estimates;" maintains Buy rating, $3.34 target price.
Moving up from oversold position. Next resistance at 2.00.
222 lots done 2 cts below the close at 16:59:50, is it due to forced buy by SGX for shortists ?
| 17:05:07 | 1.840 | 222,000 | Sell Down |
| 16:59:50 | 1.860 | 2,000 | Buy Up |
| 16:59:18 | 1.850 | 2,000 | Sell Down |
| 16:58:51 | 1.850 | 10,000 | Sell Down |
| 16:58:24 | 1.860 | 1,000 | Buy Up |
| 16:57:48 | 1.860 | 1,000 | Buy Up |
Palm oil counters especially, Indo agri, golden agri and Wilmar coming out of grossly oversold position by all technical indicators. Crude oil prices likely to hover at 130 because of Iranian prob and potential risks of hurricane Dolly affecting oil production at Gulf of Mexico. This should provide some stabilisation to downward pressure. Immediate resistance of Indo agri at 2.00. I am expecting very good results from palm oil counters for the 2nd quarter. Suspect that recent sell down in palm oil counters and CPO futures may be the work of Hedge funds. May see them collecting in a big way until the release of results. Just my opinion. Caveat emptor.
Credit Suisse would be wrong about the drop in CPO production by London Sumatra, from what I read of their latest operating report on their website.