CIMB Research cut its target price for palm oil firm Indofood Agri Resources to $1.55 from $1.82 and kept its ‘outperform’ rating, citing weak quarterly core earnings due to high estate costs and lower rubber earnings.
By 9:08 a.m., Indofood Agri shares fell 2.8% to $1.225, and have dropped 3.2% since the start of the year, compared to a 20% loss in the FTSE ST Consumer Goods Index.
Indofood Agri’s third quarter net profit rose 22% to $35 million from a year ago, lifted by higher sales volume of palm products and contribution from sugar operations.
However, CIMB said its core net profit for July-September fell 24% to 242 rupiah from a year ago as higher costs and inventories offset stronger sugar earnings.
The broker noted that Indofood said it is keeping its 2012 crude palm oil production target of 890,000-900,000 tonnes, suggesting a strong fourth quarter output, which could help lift sales.
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