(INDF IJ / INDF.JK, TRADING BUY - Upgraded, Rp1,200 - Tgt. Rp1,350, Consumer)
Three recent developments with positive implications for Indofood have yet to be priced into its share price, in our view. These are more buoyant CPO prices, rupiah strength, and an easing of the crowd-out' effect which should enhance the chances of its bond-raising exercise. While refinancing risks exist, albeit lower, and concerns remain over its questionable late 2008 acquisition, these have been more than adequately priced in, in our calculation. With P/BV at its lowest ever and with a trailing core P/E close to historical low, a higher risk appetite bodes well for its share price. Upgrade to Trading Buy from Underperform with a new target price of Rp1,350, up from Rp910, still based on sum-of-the-parts valuation but now incorporating a lower 20% discount to NAV (from 25% previously).
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