BISI: Initiate BUY recommendation with TP of Rp 1,940
We initiate coverage on BISI with a BUY recommendation at a target price of Rp1,940, a DCF-calculation based on WACC of 17% and LTG of 3%. At our TP, the stock is trading at a PER of 21.8 times FY09 earnings, providing an upside potential of 26.0%. We considered BISI a well-diversified company involved in a defensive sector of Indonesian agriculture commanding significant market share of 60% for corn seeds and 40% for rice seeds. Aside from fundamental perspective, we view the stock trading at an attractive 2nd lowest range of historical PER of 13 times (exhibit 17) which suggest lower downside for the stock price.
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