Indopremier KLBF (HOLD - TP Rp. 840)

KLBF Management booked Q109 profit above consensus and our expectation because they have succeed to maintain their cost, both of COGS and operational expenditure. As a result, they have been able to increase YoY Q109 profit by 23.5% to Rp. 248 billion. However, decreasing purchasing power derived by declining company’s powder milk sales will be the major company bottom line risk for 2009. Moreover, huge liquid assets will give benefit for KLBF since credit cost still stay high. Nevertheless, we recommend KLBF with HOLD recommendation (TP-840) which calculated with discounted cash flow model.