Indofood Sukses Makmur (INDF) - Value adding ICBP IPO

Indofood Sukses Makmur (INDF) – Maintain HOLD
Price: Rp5,250– Target Price: Rp5,700

Value adding ICBP IPO

  • Indofood’s subsidiary, Indofood CBP (ICBP), IPO listing has been confirmed to be priced at Rp5,395/share.
  • Compared with domestic and regional peers, ICBP valuation is still attractive because it is going to be traded at a discount against its peers (domestic peers P/E’10-11E 21x-18.1x and regional peers P/E’10-11F 26.2x-21x).
  • INDF’s bottom line will be relatively stable after ICBP IPO with only 2-3% dilution in FY10-11 bottom line estimation.
  • The subsidiary’s IPO will bring benefits for the parent company, INDF net gearing will drop to 0.36x – 0.31x for FY10-11F and debt to equity ratio will also drop to 1.08x.
  • Maintain Hold, TP of Rp5,700 reflects PER’10-11E 21.6x – 18.5x.