*Official* Indo Agri Resources
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Shion
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Too many share buybacks portrays a negative impression for me
friendlyguy
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indoagri just a holding company with no asset liao.
Commodities have been in the mud for the past 3-4 years.
Yeah in 2009-2010, El Nino impact supply of CPO which drove up the price of CPO significantly... And consequently these commodities stock reached their high..
But again in 2014, El Nino was a flake. Didn't really become El Nino, rather become Fernando Torres
Jupiter2017
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http://www.businesstimes.com.sg/com...i-q3-profit-drops-37-on-fertilisers-and-forex
Indofood Agri Q3 profit drops 37% on fertilisers and forex
Fri, Oct 27, 2017 - 7:49 AM Andrea Soh sandrea@sph.com.sg
EARNINGS for Indofood Agri Resources - which refines crude palm oil and cultivates sugar cane crops - fell 37 per cent in the third quarter despite higher revenue, dragged lower by higher fertiliser application, higher operating expenses and foreign currency fluctuations.
The group's net profit for the three months ended Sept 30 stood at 100.5 billion rupiah (S$10 million), compared to 159.2 billion rupiah in the year-ago quarter. This translated to earnings of 72 rupiah for each share, down from 114 rupiah a year ago.
Revenue rose 5 per cent to 3.72 trillion rupiah as the group's palm oil output recovered from the El Nino drought in 2016. This growth, however, was outpaced by higher costs, which rose 9 per cent to 2.97 trillion rupiah due to higher fertiliser application.
As a result, gross profit slumped 11 per cent to 748.2 trillion rupiah.
The bottomline was further eroded by an increase in selling and distribution expenses, as well as general and administrative expenses.
Selling and distribution expenses rose 35 per cent over the same period last year due to higher advertising and promotion expenses, as well as higher freight cost.
Meanwhile, the 18 per cent jump in general and administrative expenses was mainly due to higher salaries and employee benefits, said IndoAgri.
On top of these, the group recorded a foreign exchange loss of 21.5 billion rupiah, reversing from a forex gain of 40.3 billion rupiah in the year-ago period, as the Indonesian rupiah weakened slightly against the US dollar during the year.
Looking ahead, IndoAgri said agricultural commodity prices remain volatile, driven by mixed fundamentals and global developments. These include higher supply forecasts for competing vegetable oils and slower demand growth from key markets such as China, as well as geopolitical uncertainties.
The European Union - the third largest palm oil import market - has also recently voted to apply stricter regulations over certified and sustainable vegetable oil, and to phase out the use of vegetable oils such as palm oil, soy and rapeseed for biofuels by 2020, the firm noted.
"Nonetheless, longer term palm prices are expected to be supported by slower production growth arising from slowing down of new plantings," the group said in the results.
IndoAgri said its operations in Indonesia also continue to be supported by a positive domestic economic outlook, large domestic consumption and ongoing fiscal reforms in infrastructure and social security. The country has overtaken India as the largest palm consumer since 2016, consuming about 15 per cent of global palm oil supplies.
The group is building three new mills in line with the growth in palm oil production. One has been completed in May this year; a second one is due to be completed by the end of 2017, and one more next year.
It is also expanding its refinery in Surabaya by 300,000 tonnes a year to meet the increased demand. This will be completed in the first quarter of next year.
"We continue to enhance our operational capacities to capture the growth opportunities, as well as proactively improve operations, increase yields, raise productivity and control costs," said the group.
price link: http://www.shareinvestor.com/fundamental/factsheet.html?counter=5JS.SI
Indofood Agri Q3 profit drops 37% on fertilisers and forex
Fri, Oct 27, 2017 - 7:49 AM Andrea Soh sandrea@sph.com.sg
EARNINGS for Indofood Agri Resources - which refines crude palm oil and cultivates sugar cane crops - fell 37 per cent in the third quarter despite higher revenue, dragged lower by higher fertiliser application, higher operating expenses and foreign currency fluctuations.
The group's net profit for the three months ended Sept 30 stood at 100.5 billion rupiah (S$10 million), compared to 159.2 billion rupiah in the year-ago quarter. This translated to earnings of 72 rupiah for each share, down from 114 rupiah a year ago.
Revenue rose 5 per cent to 3.72 trillion rupiah as the group's palm oil output recovered from the El Nino drought in 2016. This growth, however, was outpaced by higher costs, which rose 9 per cent to 2.97 trillion rupiah due to higher fertiliser application.
As a result, gross profit slumped 11 per cent to 748.2 trillion rupiah.
The bottomline was further eroded by an increase in selling and distribution expenses, as well as general and administrative expenses.
Selling and distribution expenses rose 35 per cent over the same period last year due to higher advertising and promotion expenses, as well as higher freight cost.
Meanwhile, the 18 per cent jump in general and administrative expenses was mainly due to higher salaries and employee benefits, said IndoAgri.
On top of these, the group recorded a foreign exchange loss of 21.5 billion rupiah, reversing from a forex gain of 40.3 billion rupiah in the year-ago period, as the Indonesian rupiah weakened slightly against the US dollar during the year.
Looking ahead, IndoAgri said agricultural commodity prices remain volatile, driven by mixed fundamentals and global developments. These include higher supply forecasts for competing vegetable oils and slower demand growth from key markets such as China, as well as geopolitical uncertainties.
The European Union - the third largest palm oil import market - has also recently voted to apply stricter regulations over certified and sustainable vegetable oil, and to phase out the use of vegetable oils such as palm oil, soy and rapeseed for biofuels by 2020, the firm noted.
"Nonetheless, longer term palm prices are expected to be supported by slower production growth arising from slowing down of new plantings," the group said in the results.
IndoAgri said its operations in Indonesia also continue to be supported by a positive domestic economic outlook, large domestic consumption and ongoing fiscal reforms in infrastructure and social security. The country has overtaken India as the largest palm consumer since 2016, consuming about 15 per cent of global palm oil supplies.
The group is building three new mills in line with the growth in palm oil production. One has been completed in May this year; a second one is due to be completed by the end of 2017, and one more next year.
It is also expanding its refinery in Surabaya by 300,000 tonnes a year to meet the increased demand. This will be completed in the first quarter of next year.
"We continue to enhance our operational capacities to capture the growth opportunities, as well as proactively improve operations, increase yields, raise productivity and control costs," said the group.
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Jupiter2017
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http://www.straitstimes.com/uncateg...th-palm-oil-supplier-over-labour-abuse-claims
Jan 24, 2018
PepsiCo cuts ties with palm oil supplier over labour abuse claims
KUALA LUMPUR (REUTERS) - Food and beverage giant PepsiCo has suspended procurement from a palm oil supplier over claims of labour abuses on its Indonesian plantations, a move hailed by campaigners on Wednesday (Jan 24).
A 2016 probe by several campaign groups alleged there were child labour and worker exploitations, such as low wages and hazardous working conditions, on Indonesian plantations operated by Singapore-listed Indofood Agri Resources.
Although IndoAgri has taken action to address the complaints, PepsiCo said it decided to suspend ties "pending further progress and visibility around the issues" after it looked into the allegations.
"PepsiCo is very concerned about the allegations that our policies and commitments on palm oil, forestry stewardship and human rights are not being met," it said in a statement.
Neither IndoAgri nor its parent company, Indofood, were immediately available to comment.
IndoAgri said on its website that it has a sustainable palm oil policy which ensures human rights are respected.
Businesses are facing increasing pressure from governments and consumers to disclose what actions they are taking to ensure their supply chains are free from modern-day slavery.
Indonesia is the world's largest palm oil producer but it has been regularly linked to the destruction of rainforests and wildlife habitats, as well as displacement of indigenous communities.
IndoAgri is a subsidiary of Indonesian food manufacturer Indofood, which produces PepsiCo's snacks in Indonesia under a joint venture partnership. The joint venture sourced palm oil from IndoAgri.
The investigation was carried out by San Francisco-based Rainforest Action Network (RAN), Indonesian labour rights group OPPUK and Washington-based International Labor Rights Forum.
"After years of denial, PepsiCo has admitted to the high risks associated with its palm oil supply chain and business partner," RAN campaigner Robin Averbeck said in a statement.
Palm oil, used in soap, cosmetics and food spreads, has been one of the fastest expanding crops in the last few decades.
Jan 24, 2018
PepsiCo cuts ties with palm oil supplier over labour abuse claims
KUALA LUMPUR (REUTERS) - Food and beverage giant PepsiCo has suspended procurement from a palm oil supplier over claims of labour abuses on its Indonesian plantations, a move hailed by campaigners on Wednesday (Jan 24).
A 2016 probe by several campaign groups alleged there were child labour and worker exploitations, such as low wages and hazardous working conditions, on Indonesian plantations operated by Singapore-listed Indofood Agri Resources.
Although IndoAgri has taken action to address the complaints, PepsiCo said it decided to suspend ties "pending further progress and visibility around the issues" after it looked into the allegations.
"PepsiCo is very concerned about the allegations that our policies and commitments on palm oil, forestry stewardship and human rights are not being met," it said in a statement.
Neither IndoAgri nor its parent company, Indofood, were immediately available to comment.
IndoAgri said on its website that it has a sustainable palm oil policy which ensures human rights are respected.
Businesses are facing increasing pressure from governments and consumers to disclose what actions they are taking to ensure their supply chains are free from modern-day slavery.
Indonesia is the world's largest palm oil producer but it has been regularly linked to the destruction of rainforests and wildlife habitats, as well as displacement of indigenous communities.
IndoAgri is a subsidiary of Indonesian food manufacturer Indofood, which produces PepsiCo's snacks in Indonesia under a joint venture partnership. The joint venture sourced palm oil from IndoAgri.
The investigation was carried out by San Francisco-based Rainforest Action Network (RAN), Indonesian labour rights group OPPUK and Washington-based International Labor Rights Forum.
"After years of denial, PepsiCo has admitted to the high risks associated with its palm oil supply chain and business partner," RAN campaigner Robin Averbeck said in a statement.
Palm oil, used in soap, cosmetics and food spreads, has been one of the fastest expanding crops in the last few decades.
Jupiter2017
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http://www.businesstimes.com.sg/com...e-to-sustainability-practices-and-labour-laws
IndoAgri says operations adhere to sustainability practices and labour laws
Fri, Jan 26, 2018 - 8:51 AM Rachel Mui rachmui@sph.com.sg
INDOFOOD Agri Resources, which refines crude palm oil and cultivates sugar cane crops, said Friday that it is complying with Indonesian labour laws and sustainability policies.
In response to a media report alleging that PepsiCo had suspended procurement from IndoAgri over labour abuse claims, the company said that it has not been a supplier to PepsiCo since early 2017, and that this had not resulted in a material impact on its business.
"Most of our plantations are certified under the RSPO (Roundtable for Sustainable Palm Oil) and ISPO (Indonesian Sustainable Palm Oil) certification schemes for sustainability," the group said.
It added that the company complies with the labour laws and regulations of the Indonesian government, and does not have any disputes with any of its 10 labour unions or the Indonesian Ministry of Labor.
"We have also recently received a good compliment and zero accident awardfrom the Indonesian Ministry of Labor," IndoAgri said.
According to media reports, a 2016 probe by several campaign groups claimed that there were child labour and worker exploitation, such as low wages and hazardous working conditions, on Indonesian plantations operated by Singapore-listed IndoAgri.
The reports added that although IndoAgri has taken action to address the complaints, PepsiCo decided to suspend ties "pending further progress and visibility around the issues" after it looked into the allegations.
price link: http://www.shareinvestor.com/fundamental/factsheet.html?counter=5JS.SI
IndoAgri says operations adhere to sustainability practices and labour laws
Fri, Jan 26, 2018 - 8:51 AM Rachel Mui rachmui@sph.com.sg
INDOFOOD Agri Resources, which refines crude palm oil and cultivates sugar cane crops, said Friday that it is complying with Indonesian labour laws and sustainability policies.
In response to a media report alleging that PepsiCo had suspended procurement from IndoAgri over labour abuse claims, the company said that it has not been a supplier to PepsiCo since early 2017, and that this had not resulted in a material impact on its business.
"Most of our plantations are certified under the RSPO (Roundtable for Sustainable Palm Oil) and ISPO (Indonesian Sustainable Palm Oil) certification schemes for sustainability," the group said.
It added that the company complies with the labour laws and regulations of the Indonesian government, and does not have any disputes with any of its 10 labour unions or the Indonesian Ministry of Labor.
"We have also recently received a good compliment and zero accident awardfrom the Indonesian Ministry of Labor," IndoAgri said.
According to media reports, a 2016 probe by several campaign groups claimed that there were child labour and worker exploitation, such as low wages and hazardous working conditions, on Indonesian plantations operated by Singapore-listed IndoAgri.
The reports added that although IndoAgri has taken action to address the complaints, PepsiCo decided to suspend ties "pending further progress and visibility around the issues" after it looked into the allegations.
price link: http://www.shareinvestor.com/fundamental/factsheet.html?counter=5JS.SI
Shion
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Indomie brand owner offers to take private Indofood Agri at $0.28 per share
Indomie brand owner offers to take private Indofood Agri at $0.28 per share
https://www.straitstimes.com/busine...ts-buyout-offer-from-indomie-maker-at-028-per
SINGAPORE - The maker of Indomie instant noodles is offering $0.28 per share of Indofood Agri Resources to take the Singapore-listed agribusiness group private. The offer values the company at around $390.9 million.
The bid by Indofood Sukses Makmur comes at a 7.7 per cent premium to Indofood Agri's last traded price of $0.26 on April 5, before trading was halted for the announcement. The stock was trading at the offer price as at 9.40am on Thursday (April 11) after trading resumed.
Indofood Sukses Makmur, which is controlled by Indonesian tycoon Anthoni Salim, already holds a 74.52 per cent stake in the target company. Its offer is conditional upon obtaining control over at least 90 per cent of the target. If its bid succeeds, the offeror plans to delist and privatise Indofood Agri.
In its offer announcement, Indofood Sukses Makmur said its offer gives Indofood Agri shareholders an opportunity to realise their investment which "may otherwise not be readily available" due to the "low trading liquidity of the shares", the Singapore company said in an exchange filing.
The offer price represents a premium of approximately 21.5 per cent, 26.3 per cent, 29.0 per cent and 23.1 per cent over the volume-weighted average price per share for the one-month, three-month, six-month and 12-month periods respectively, up to and including April 5, the last trading day before th announcement.
Indofood Agri and its subsidiaries will continue to develop and grow their existing businesses, with continued reviews on their operations and strategic options being conducted from time to time. Indofood Sukses Makmur will retain flexibility at any time to consider further options or opportunities in relation to Indofood Agri.
It added that there are no current intentions by the offeror to introduce major changes to the existing business, re-deploy fixed assets or discontinue the employment of existing employees, other than in the ordinary and usual course of business.
The offer document will be issued within 14 to 21 days from the announcement date.
Indofood Agri's board will also appoint an independent financial adviser (IFA) to advise company directors considered independent for the purposes of the offer. A circular containing the IFA's recommendation will be also be issued.
DBS analysts William Simadiputra and Lim Rui Wen have recommended for shareholders to accept the offer even though it is "at the lower end of acquisition multiples for plantations".
"We believe that Indofood Agri's steep discount to its peers is attributed to its shrinking operating profit margins, unlike its peers who have been able to demonstrate an ability to maintain their margins amidst palm oil price movements," DBS'analysts said.
DBS' last recommendation for Indofood Agri was to "hold", with a target price of $0.19 per share, as it was cautious on the company's earnings momentum and ability to return to pre-2017 earnings levels, even though its share price performance and valuations were undemanding.
DBS recommends "more direct exposure" via ownership of Indofood Agri's Indonesia-listed upstream entity London Sumatra, which it recommended to "buy" with a target price of 1,700 rupiah (S$0.16).
Meanwhile, David Blennerhassett, an independent analyst who publishes on Smartkarma, said Indofood Sukses Makmur could afford to raise the offer price and "impart some justice to long-suffering minorities", having recently bounced off multi-year low levels against a weakening global demand backdrop for palm oil.
"This strikes me as an offer requiring a bump to get it over the line," Mr Blennerhassett said. He added that the deal is "small beer" for offeror Indofood Sukses Makmur, as Indofood Agri's free float is currently at 25.48 per cent, hence a successful offer would incur just around US$67 million.
While the takeout price "appears okay on fundamentals relative to peers" for Mr Blennerhassett, the takeover premium of around 21 per cent using the one-month VWAP is "not a knock-out".
As the offeror has no intention to restore the free float should it get breached, Mr Blennerhassett said it could potentially "play hardball" and opt for a delisting if it secures 75 per cent of shares out of the offer, assuming the offeror waives the 90 per cent condition and declares the offer unconditional.
Indomie brand owner offers to take private Indofood Agri at $0.28 per share
https://www.straitstimes.com/busine...ts-buyout-offer-from-indomie-maker-at-028-per
SINGAPORE - The maker of Indomie instant noodles is offering $0.28 per share of Indofood Agri Resources to take the Singapore-listed agribusiness group private. The offer values the company at around $390.9 million.
The bid by Indofood Sukses Makmur comes at a 7.7 per cent premium to Indofood Agri's last traded price of $0.26 on April 5, before trading was halted for the announcement. The stock was trading at the offer price as at 9.40am on Thursday (April 11) after trading resumed.
Indofood Sukses Makmur, which is controlled by Indonesian tycoon Anthoni Salim, already holds a 74.52 per cent stake in the target company. Its offer is conditional upon obtaining control over at least 90 per cent of the target. If its bid succeeds, the offeror plans to delist and privatise Indofood Agri.
In its offer announcement, Indofood Sukses Makmur said its offer gives Indofood Agri shareholders an opportunity to realise their investment which "may otherwise not be readily available" due to the "low trading liquidity of the shares", the Singapore company said in an exchange filing.
The offer price represents a premium of approximately 21.5 per cent, 26.3 per cent, 29.0 per cent and 23.1 per cent over the volume-weighted average price per share for the one-month, three-month, six-month and 12-month periods respectively, up to and including April 5, the last trading day before th announcement.
Indofood Agri and its subsidiaries will continue to develop and grow their existing businesses, with continued reviews on their operations and strategic options being conducted from time to time. Indofood Sukses Makmur will retain flexibility at any time to consider further options or opportunities in relation to Indofood Agri.
It added that there are no current intentions by the offeror to introduce major changes to the existing business, re-deploy fixed assets or discontinue the employment of existing employees, other than in the ordinary and usual course of business.
The offer document will be issued within 14 to 21 days from the announcement date.
Indofood Agri's board will also appoint an independent financial adviser (IFA) to advise company directors considered independent for the purposes of the offer. A circular containing the IFA's recommendation will be also be issued.
DBS analysts William Simadiputra and Lim Rui Wen have recommended for shareholders to accept the offer even though it is "at the lower end of acquisition multiples for plantations".
"We believe that Indofood Agri's steep discount to its peers is attributed to its shrinking operating profit margins, unlike its peers who have been able to demonstrate an ability to maintain their margins amidst palm oil price movements," DBS'analysts said.
DBS' last recommendation for Indofood Agri was to "hold", with a target price of $0.19 per share, as it was cautious on the company's earnings momentum and ability to return to pre-2017 earnings levels, even though its share price performance and valuations were undemanding.
DBS recommends "more direct exposure" via ownership of Indofood Agri's Indonesia-listed upstream entity London Sumatra, which it recommended to "buy" with a target price of 1,700 rupiah (S$0.16).
Meanwhile, David Blennerhassett, an independent analyst who publishes on Smartkarma, said Indofood Sukses Makmur could afford to raise the offer price and "impart some justice to long-suffering minorities", having recently bounced off multi-year low levels against a weakening global demand backdrop for palm oil.
"This strikes me as an offer requiring a bump to get it over the line," Mr Blennerhassett said. He added that the deal is "small beer" for offeror Indofood Sukses Makmur, as Indofood Agri's free float is currently at 25.48 per cent, hence a successful offer would incur just around US$67 million.
While the takeout price "appears okay on fundamentals relative to peers" for Mr Blennerhassett, the takeover premium of around 21 per cent using the one-month VWAP is "not a knock-out".
As the offeror has no intention to restore the free float should it get breached, Mr Blennerhassett said it could potentially "play hardball" and opt for a delisting if it secures 75 per cent of shares out of the offer, assuming the offeror waives the 90 per cent condition and declares the offer unconditional.
greentiger
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This company make me lose a lot of money.
I bought it in 2011 at around 2.40. Now they want to delist it at 28 cents.
Their problems started in 2011 when they hive off their highly profitable subsidiary SIMP and got it listed in Jakarta causing their share price (Indoagri) to plunge. It has never recovered since.
I have stopped investing in Indo listed companies in SGX after this bad experience.
(You can read the article in Straits Time in 2011 below)
Jun 8, 2011
IndoAgri feels investors' wrath
Share price drops by nearly a third after it hives off profitable subsidiary for Jakarta listing
By Goh Eng Yeow, Senior Correspondent
SOOTHING words from analysts have failed to assuage investors' unhappiness with Indofood Agri Resources for hiving off its highly profitable Indonesian subsidiary as a separately listed firm.
Since April, IndoAgri's share price has dived as much as 29 per cent as shareholders voted with their feet, following the company's decision to list Salim Ivomas Pratamas (Simp), its main earnings contributor, on Jakarta's stock exchange.
Simp's impending listing debut in Jakarta has done little to lure investors back. IndoAgri ended a mere three cents higher at $1.73 yesterday on a trading volume of 7.27 million shares - a far cry from the $2.31 close it registered on April 1.
Concerns have been voiced by unhappy investors that IndoAgri may have priced Simp too low when it was hived off. The Simp IPO was fixed at 1,100 rupiah (15.9 Singapore cents) a share, at the low end of an indicative price range of 1,060 rupiah to 1,700 rupiah a share.
'Based on the 1,100 rupiah a share, we calculate the implied net asset value for IndoAgri at $1.40 a share. In addition, we estimate a 2011 earnings per share dilution of 12per cent,' said Goldman Sachs in a recent report.
Investors have also expressed concern that as Simp was IndoAgri's main operating asset, the Singapore- listed firm might be reduced to an investment holding concern after its listing.
This might dampen its share price, as investment companies usually trade at a discount to their sum-of-parts valuations.
But some analysts believe that the selling may have been overdone.
In a recent report, BNP Paribas analyst Michael Greenall noted that IndoAgri might not necessarily suffer a large holding company discount since it is listed in Singapore while its assets are separately listed in Jakarta.
As a result of the listing, IndoAgri would cut its stake in Simp from 90per cent to 72per cent, with Simp raising US$384.6million (S$472million) from its Indonesian IPO, after deducting expenses.
Mr Greenall noted that, with a market value of 17.6 trillion rupiah based on its IPO issue price of 1,100 rupiah, Simp will be the second-largest plantation company by market value in Indonesia after Astra Agro Lestari when it is listed.
TA Securities, which has a buy call on the counter, said that even after applying a 10 per cent discount on its sum-of-parts valuation on IndoAgri, it had arrived at a target price of $1.92 for the counter.
It also noted that IndoAgri had a $230 million cash hoard which it can use to acquire agricultural assets. 'Management is being open on the preferred choice, although we think palm oil, rubber and sugar will remain the priority, given their expertise in these fields,' it said.
TA also believed that IndoAgri management 'will be prepared to gear up ahead to fund any acquisitions', given its low debt levels after the Simp listing.
'Assuming a comfortable net gearing ratio of 0.7 times, we estimate the group could borrow up to $1.7billion,' it said.
JPMorgan, which also has an 'overweight' call on IndoAgri, said concerns had been raised about Simp possibly getting hit by a higher cash tax expense, as it makes the transition from Indonesian accounting rules to international accounting standards, because of its listing.
However, it believes this is not the case as other SGX-listed firms with Indonesian plantation assets, such as Wilmar International and Golden Agri Resources, have adopted similar accounting treatment without suffering a cash tax implication.
I bought it in 2011 at around 2.40. Now they want to delist it at 28 cents.
Their problems started in 2011 when they hive off their highly profitable subsidiary SIMP and got it listed in Jakarta causing their share price (Indoagri) to plunge. It has never recovered since.
I have stopped investing in Indo listed companies in SGX after this bad experience.
(You can read the article in Straits Time in 2011 below)
Jun 8, 2011
IndoAgri feels investors' wrath
Share price drops by nearly a third after it hives off profitable subsidiary for Jakarta listing
By Goh Eng Yeow, Senior Correspondent
SOOTHING words from analysts have failed to assuage investors' unhappiness with Indofood Agri Resources for hiving off its highly profitable Indonesian subsidiary as a separately listed firm.
Since April, IndoAgri's share price has dived as much as 29 per cent as shareholders voted with their feet, following the company's decision to list Salim Ivomas Pratamas (Simp), its main earnings contributor, on Jakarta's stock exchange.
Simp's impending listing debut in Jakarta has done little to lure investors back. IndoAgri ended a mere three cents higher at $1.73 yesterday on a trading volume of 7.27 million shares - a far cry from the $2.31 close it registered on April 1.
Concerns have been voiced by unhappy investors that IndoAgri may have priced Simp too low when it was hived off. The Simp IPO was fixed at 1,100 rupiah (15.9 Singapore cents) a share, at the low end of an indicative price range of 1,060 rupiah to 1,700 rupiah a share.
'Based on the 1,100 rupiah a share, we calculate the implied net asset value for IndoAgri at $1.40 a share. In addition, we estimate a 2011 earnings per share dilution of 12per cent,' said Goldman Sachs in a recent report.
Investors have also expressed concern that as Simp was IndoAgri's main operating asset, the Singapore- listed firm might be reduced to an investment holding concern after its listing.
This might dampen its share price, as investment companies usually trade at a discount to their sum-of-parts valuations.
But some analysts believe that the selling may have been overdone.
In a recent report, BNP Paribas analyst Michael Greenall noted that IndoAgri might not necessarily suffer a large holding company discount since it is listed in Singapore while its assets are separately listed in Jakarta.
As a result of the listing, IndoAgri would cut its stake in Simp from 90per cent to 72per cent, with Simp raising US$384.6million (S$472million) from its Indonesian IPO, after deducting expenses.
Mr Greenall noted that, with a market value of 17.6 trillion rupiah based on its IPO issue price of 1,100 rupiah, Simp will be the second-largest plantation company by market value in Indonesia after Astra Agro Lestari when it is listed.
TA Securities, which has a buy call on the counter, said that even after applying a 10 per cent discount on its sum-of-parts valuation on IndoAgri, it had arrived at a target price of $1.92 for the counter.
It also noted that IndoAgri had a $230 million cash hoard which it can use to acquire agricultural assets. 'Management is being open on the preferred choice, although we think palm oil, rubber and sugar will remain the priority, given their expertise in these fields,' it said.
TA also believed that IndoAgri management 'will be prepared to gear up ahead to fund any acquisitions', given its low debt levels after the Simp listing.
'Assuming a comfortable net gearing ratio of 0.7 times, we estimate the group could borrow up to $1.7billion,' it said.
JPMorgan, which also has an 'overweight' call on IndoAgri, said concerns had been raised about Simp possibly getting hit by a higher cash tax expense, as it makes the transition from Indonesian accounting rules to international accounting standards, because of its listing.
However, it believes this is not the case as other SGX-listed firms with Indonesian plantation assets, such as Wilmar International and Golden Agri Resources, have adopted similar accounting treatment without suffering a cash tax implication.
the current owner already own 70%+ right? seems tough leh.
also has the official offer been put out?
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