Nippon Indosari Corpindo ($ROTI), A Good Start To 2017
Early 2017 has seen two significant developments for Nippon, which came in the form of lower input costs and the acquisition of a Philippines-based bread company. The company signed a new 6-months (for Jan-Jun 2017) purchase contract on flour – its main raw material – at a lower price. In addition, its JV SFC, acquired a local bread company which we see as a strategic move for Nippon’s penetration in Philippines market. Maintain BUY with a DCF-based TP of IDR1,870 (13% upside), implying 25x FY17F P/E.