BUY S$0.178
Price Target : S$0.28 (Prev S$0.35)
At a Glance
• 3Q11 results in line with estimates
• Growth drivers remain intact
• Maintain Buy, TP lowered to S$0.28
Comment on Results
3Q11 in line. 3Q11 results were in line with our estimates. Revenue grew 30% y-o-y to Rp183.4m, 4% higher than our estimates, while earnings tripled to Rp32.2m in line with our Rp31.9m forecast. Revenue growth was driven by both volume and selling price increase. CSF raised selling prices by an average of 5% qoq in 2Q11. Sales volume increases were attributable to increased orders from existing customers in North Sumatra and Jakarta. Gross margins were 28%, also in line with our estimates.
Growth drivers remain intact. CSF commenced cup noodle production in 2Q11. While current production is still small, we expect it to ramp up meaningfully in FY12F. There is no change to commencement of beverage production date. We understand from management that it is currently procuring the manufacturing lines and testing is slated for 1Q12 followed by marketing in 2Q12. We maintain our earnings estimates with growth forecasts of 25% for FY12F and 27% for FY13F.
Recommendation
Maintain Buy, TP S$0.28. We continue to believe that the commencement of beverage will be a key catalyst for the stock going forward. The stock offers exposure to rising Indonesia consumption. Valuations are currently attractive with forward earnings multiple of 3.2x. We lowered our target PE from 7x to 4x FY12 earnings to realign with its historical average earnings multiple. Hence, our TP is lowered to S$0.28 from S$0.35. Maintain Buy.
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