Indofood Agri Resources Ltd: Buy (Upgraded)

- FY10 revenue increased by 5% y-y to Rp9,484 b. 4Q10 revenue increased by 31% y-y to Rp2,980 b.
- FY10 net profit decreased by 8% y-y to Rp1,402 b, while 4Q10 net profit increased by 108% y-y to Rp598 b.
- Full year net profit came in lower due to lower biological asset gain and lower net foreign exchange gains as compared to the year before.
- Target planting for FY11 to be around 15,000-20,000 Ha.
- After updating our model and earnings, we upgrade the stock to a BUY recommendation with a target price of S$2.78.

FY10 revenue increased by 5% y-y to Rp9,484 b with a net profit of Rp1,402 b. The higher revenue was largely attributed to the higher sales of edible oil and fats product and the higher selling prices of CPO, palm kernel and rubber. Gross profit came in 16% higher in FY10, primarily due to the plantation division, which had benefitted from high CPO prices. However, overall FY10 net profit was ~8% y-y lower due to lower biological asset gain and net foreign exchange gains as compared to the year before.

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