Indofood Agri Resources - More scoops on the sugar assets
Target S$1.51 (Long Term: Out Perform)
We like Indofood Agri's purchase of sugar assets in Brazil as the growth potential is compelling and the acquisition price is fair. The group expects its Brazil mill to raise its sugar production from 2.1m tonnes in FY3/12 to3.8m tonnes in FY15. We also view the implied EV/tonne for the sugar mill capacity as fair, being within recent market transactions. We maintain our Outperform call and target price of S$1.51, which is based on a 10% discount to its SOP value. Key re-rating catalysts are this acquisition and better CPO prices.
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