OCBC Investment Research raised its target price for Petra
Foods Ltd to S$3.12 from S$2.98 and maintained its
'buy' rating, saying its valuation premium is justified due to
the company's exposure to emerging consumer demand in Asia.
OCBC raised its valuation of Petra to 25 times 12-month
forward price-earnings from 24 times.
Petra shares were down 1.05 percent at S$2.84 on Monday. The
stock has risen 53.5 percent so far this year, leading the 29
percent gain in the FT ST Mid Cap Index.
OCBC expects revenue growth of 3.8 percent for 2013 fiscal
year mainly on the back of Petra's branded consumer division,
which is driven by consumption growth in the company's key
markets of Indonesia and the Philippines.
The combination of higher-margin product mix, average
selling price increases and favourable raw material costs have
helped Petra's branded consumer unit to offset the weakness in
the cocoa ingredients division, OCBC said.
Petra manufactures and supplies cocoa ingredients, on top of
selling its own confectionery brands, such as the SilverQueen
chocolate which is popular in Indonesia.
OCBC expects an easing of the yield pressure in the cocoa
ingredients division in the coming months, helping group margins
to improve to around 9 percent in 2013 fiscal year from 7.6
percent in 2011.
1022 (0222 GMT)