Sep 06, 2017 11:57:06

Ground checks – Indofood’s higher flour retail selling price MoM, but flat noodle selling price

Based on our ground checks in a Hypermart store in Jakarta, Indofood Sukses Makmur’s (Indofood) ($INDF) flour Segitiga Biru and Kunci Biru retail selling price increased by 9% MoM and 8% MoM respectively – possibly to pass on higher wheat price which jumped at end of June. Meanwhile, Cakra Biru’s retail selling price remain flat.

Indofood’s instant noodle retail selling prices was also flat MoM. For premium instant noodle, Mayora ($MYOR)’s Bakmi Mewah retail selling price increased by 8% MoM which is now level with Indomie Real Meat’s price. Since its price difference to its competitors narrowed, we see Indofood’s premium instant noodle sales is likely to increase.

Instant noodles accounted for c.52% of Indofood’s consolidated 1H17 EBIT, while flour (Bogasari) contributed 14% to EBIT. We maintain BUY on Indofood with IDR10,300 TP (23% upside) which implies 16x FY18F P/E.