Quick takes - Flagging biological asset write-downs for 4Q - by Ivy Ng Lee Fang CFA
(IFAR SP / IFAR.SI, TRADING BUY - Maintained, S$0.56 - Tgt. S$0.77, Plantations)
Indofood Agri has announced a "non-cash" write-down of Rp663bn (or S$85.6m) for changes in the fair value of its biological assets (net of associated deferred tax effect) for FY08. We are not too surprised in view of the significant downturn in CPO prices towards 2H08 and the fact that the group reviews its biological-asset valuations half-yearly. However, we were slightly surprised by the timing of the announcement, ahead of its results release, which is not a normal practice. Overall, we are neutral as the write-down is a non-cash item and will not affect our earnings projections. Maintain Trading Buy and target price of S$0.77 (forward P/E of 10x).
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