Warrants Highlight

Indofood Agri - 'Outperform' rating

Macquarie Equities Research (MER) previously released a research paper on 24 September, with an ‘Outperform’ rating on Indofood and a 12 month price target of S$1.60. As of yesterday’s close, the counter was trading at $1.26, which is about 25% below the target price.

Macquarie’s Indofood Agri Resources warrants

Indofood Agri exhibits revenue and earnings growth
Indofood Agri Resources reported a third quarter revenue of Rp3.5 trillion (S$477 million) and a profit of Rp0.3 trillion (S$35 million). This is an increase of 7.9% on revenue and 22% on profits, compared to the same period last year.

Indofood Agri, an integrated agribusiness group and manufacturer of leading brands of edible oils and fats products in Indonesia, attributes the earnings growth to higher sales volume of palm products and contribution from sugar operations.

CEO Mr Mark Wakeford emphasized, saying that the positive sales and profit growth is driven particularly by "the contribution from sugar operations following the commencement of our first full sugarcane crushing season in May 2012."

Although the group’s gross profit rose 1.5% this quarter compared to 3Q2011, the nine month gross profit fell 6.1% compared to 9M2011 mainly because of lower average selling prices for plantation crops and higher cost of production.

Upbeat on revenue streams
Indofood Agri gave outlooks for their different revenue streams:

1) Crude Palm Oil (CPO)
While the company went into high production season, the average CPO prices unfortunately fell 11% from 1H2012 to 3Q2012. However, they are of the opinion that the long term fundamentals of CPO is still supported by consumption growth, especially emerging Asian economies, coupled with demand for biodiesel in Europe, Brazil and Argentina.

2) Rubber
Rubber prices also fell significantly this year given the weaker demand, particularly in Europe. Like CPO prices, Indofood Agri feels that the long term outlook for rubber will remain positive, supported by tyre-makers, automotive industries and rubber goods manufacturers in developing economies and emerging markets. Since China is the world's largest consumer of rubber, the company expects the Chinese to contribute strongly.

3) Sugar
Half of Indonesia's consumption of sugar is from imports, with the Indonesian government imposing a strict import quota system for sugar. With effect from May 2012, the floor price of imported sugar will be revised upwards, thus giving an advantage to domestic sugarcane producers like Indofood Agri.

Singapore Market Wrap

Mixed Europe data

Better than expected German retail sales was offset by an unemployment rate in the Euro Zone which hit a new high. German retail sales rose 1.5% against analyst forecasts of 0.4%, whereas Euro Zone unemployment rate rose 11.6%, 0.1% higher than it's previous reading.
The STI closed marginally down 0.01% to 3038.37 day-on-day (d.o.d).

Call STI 3100MBeCW130131 (PA7W) exercise level 3,100.*
Put STI 2800MBePW130131 (PA8W) exercise level 2,800.*

Bank lending rose in September
Reuters reported that Singapore central bank data has shown total banking lending rising 0.7% in September vs August and 16% year-on-year. Loans and advances rose to S$472.3 billion from S$468.8, whereas housing loans for consumers improved marginally to S$145 billion from S$143.3 billion month-on-month. DBS slipped 0.64% to $13.90. OCBC rose 0.89% to $9.10 while UOB dropped 0.76% to $18.27 for the trading session.

Call DBS MB eCW130102 (O9KW) exercise price $14.00.*
Put DBS MB ePW121205 (Q7SW) exercise level 13.80.*

Call UOB MB eCW130103 (MW0W) exercise price $19.397.*
Put UOB MB ePW130104 (Q8CW) exercise level 18.00.*

Call OCBC Bk MBeCW121203 (Q1QW) exercise price $10.*
Put OCBC Bk MBePW121203 (Q4SW) exercise price $9.00.*

IndoAgri 3Q12 7.9% revenue growth
IndoArgi announced it's 3Q12 revenue at Rp3.5 trillion (S$477 million), largely due to higher sales growth from it's Plantation Division. Gross profit rose 1.5% on higher revenue with attributable profit increasing 22% year-on-year to S$35 million. IndoAgri closed 0.79% down to $1.26 d.o.d.

Call INDOFMBECW121203 (QR7W) exercise price $1.30.*
Call IndoAgriMBeCW130603 (RE8W) exercise price $1.45.*

Overnight Market Wrap

Positive start aft Hurricane Sandy

Yesterday, the Eurozone announced their unemployment rate of 11.6% for the month of September. This rate is the highest on record, with Spain having the highest percentage of people who are jobless. Spain's unemployment rate was at 25.8%.

The Euro Stoxx 600 fell 0.5% dod after the Eurozone government pressured Greece to increase spending cuts in return for aid. Greece is looking at receiving a 31 billion euro aid payout in Nov and the finance ministers are hoping that they would "seek to conclude on the program" during their meeting in Brussels on 12 Nov.

The US commenced trading after being shut for 2 days because of Hurricane Sandy. The S&P climbed less than 0.1% dod, closing at 1412.97. This is despite business activity contracting in the month of October.

Overnight Markets

Indices	Last	Change
STI	3038.37	-0.0%
HSI	21641.80	1.0%
DJIA	13096.50	-0.1%
S&P 500	1412.16	0.0%
Nasdaq	2987.95	-
China A50	7145.10	0.5%

Corporate News

Corporate Announcements

Earnings release dates:
Thurs 1 Nov: DBS (3Q12)
Fri 2 Nov: SIA (2Q12)
Fri 2 Nov: Starhub (3Q12)
Fri 2 Nov: Cosco (3Q12)
Mon 5 Nov: SembCorp Marine (3Q12)
Tues 6 Nov: Ezion (3Q12)
Tues 6 Nov: SATS (2Q13)
Wed 7 Nov: UOB (3Q12)
Wed 7 Nov: Biosensors (2Q13)
Thurs 8 Nov: Noble (3Q12)
Thurs 8 Nov: UOL (3Q12)
Fri 9 Nov: SembCorp Industries (3Q12)
Fri 9 Nov: OCBC (3Q12)
Fri 9 Nov: Wilmar (3Q12)
Mon 12 Nov: Genting (3Q12)
Wed 14 Nov: GLP (2Q13)
Wed 14 Nov: City Dev (3Q12)
Wed 14 Nov: Singtel (2Q12)
Wed 14 Nov: STX OSV (3Q12)

Ex-dividend dates:
Tue 6 Nov: Olam ($0.05)
Fri 7 Dec: SPH ($0.17)