• Thanks to higher sales in dairy and lower COGS. INDF recorded total revenue of
Rp37 trillion in FY09, down by 4.3% YoY, in line with our estimates. Consumer
Branded Product (CBP) Group is the biggest contributor (32.4% to total sales). The
sales will be down by 12% YoY to Rp34 trillion without involve of dairy division which was acquired in December 2008. However, gross profit rose 12.8% YoY to Rp 5 trillion due to decreased in commodity prices and strengthening of Rupiah. Meanwhile, net income increased by 100.7% YoY to Rp2 trillion in FY09, supporting by strong operating income and gain from foreign exchange amounting to Rp731 billion (vs FY08 foreign exchange loss Rp713 billion).
• Financial position remains solid. EBITDA rose by 19.2% YoY to Rp6.6 trillion, but
interest coverage declined to 4.3x in FY09 (from 4.8x in FY08). Leverage level improved with net geaaring dropped to 0.83x (from 1.09x). This shows INDF’s financial condition remain solid.
• Maintain HOLD. We revised up INDF’s projection due to the following reasons:
economic recovery faster than expectation, additional lines of business in cup noodles, and the addition of dairy factory in 2011. We raised price target to Rp4,000/share from Rp3,550/share (using the SOTP method), but maintain hold recommendation. Currently, INDF is trading premium against JCI, with PE'10 of 15.7x vs 14.7 JCI. Maintain HOLD
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