STOCKS NEWS INDONESIA-Unilever Indonesia slide continues on royalty worries

Thu Dec 13, 2012 4:36am GMT

Quotes

   

Shares of PT Unilever Indonesia continued their slide for the second day on Thursday on profit concerns due to higher royalty fee, and at least one brokerage downgraded the stock while three lowered their price targets.

The company's shares fell as much as 12 percent, having lost as much as 12 percent on Wednesday.

Unilever Indonesia on Wednesday agreed to pay a 5 percent fee and a maximum of 3 percent actual cost recovery, compared with the current 3.5 percent fee, to its parent company.

CIMB Equity Research downgraded the stock to 'underperform' from 'outperform' and cut its price target to 20,000 rupiah from 31,000 rupiah, saying higher royalty payments were a negative surprise for minority shareholders.

JP Morgan cut its price target to 20,000 rupiah from 22,000 rupiah while maintaining its 'underweight' rating, and said the higher royalty could affect investors' perception of Unilever as a "safe haven". It expected the share price to decline by an additional 10 to 15 percent.

Credit Suisse cut its price target to 15,725 rupiah from 18,800 rupiah while maintaining its 'underperform' rating. It said the higher royalty is not expected to be passed on to the consumer and the net profit could fall as much as 20 percent until 2015.

Unilever Indonesia shares fell 11.66 percent to 20,450 rupiah. The broader Jakarta Composite index fell 0.8 percent.

1132 (0432 GMT) (Reporting by Andjarsari Paramaditha, Editing by Anupama Dwivedi) *************************************************************** 10:07 STOCKS NEWS INDONESIA-Multi Agro Gemilang to sell 44 pct stake in Jan IPO Indonesian palm oil firm PT Multi Agro Gemilang Plantation plans to sell 44.44 percent of its enlarged capital in an initial public offering in January, the company said.

The plantation firm plans to issue up to 4 billion new shares to fund expansion and repay debt, but the pricing has not been set yet, according to a company statement published in a local newspaper.

Brent Securities and Valbury Asia Securities are the underwriters for the IPO.

Jakarta Agriculture broader index was down 0.56 percent, while the broader index was down 0.3 percent.

1006 (0306 GMT)