Tiga Pilar Sejahtera Food, an Indonesian noodle maker that is expanding into the palm oil industry, rose to a four-month high in Jakarta stock trading after reporting a 67 percent jump in 2011 net income.
Tiga Pilar gained as much as 9.8 percent before trading 7.8 percent higher at Rp 550 as of 2:57 p.m., poised for the highest close since Dec. 16. The Jakarta-based company reported 2011 net income of Rp 126.9 billion ($13.8 million) as sales more than doubled to 1.75 trillion rupiah from Rp 705 billion a year earlier.
“Initially, investors weren’t quite convinced with the company’s expansion model because they haven’t proven themselves yet,” said Adrian Joezer, an analyst at Mandiri Sekuritas in Jakarta. “But with today’s earning results out, investors are starting to discount the execution risk.”
Tiga Pilar said in November 2010 that it may spend $175 million to plant oil-palm trees and buy a plantation company in Sumatra. The company is tapping into rising demand for cooking oil in the world’s fourth-most populous nation where domestic consumption accounts for more than half of the economy. Bank Indonesia forecast the economy, Southeast Asia’s biggest, to expand as much as 6.7 percent this year, the fastest pace since before the Asian financial crisis.
Benchmark palm-oil prices in Malaysia may advance to a four-year high of 4,000 ringgit ($1,302) a metric ton by June, Dorab Mistry, director at Godrej International, who’s traded the commodity for more than three decades, said March 27. Production growth in the first half will slow from the same time in 2011 while drought in South America curbs supplies of soybeans, boosting prices, Mistry said.
Palm-oil futures climbed to a 13-month high of 3,613 ringgit a ton on April 10. Prices were at 3,489 ringgit a metric ton today.
Tiga Pilar got about 44 percent of its 2010 revenue from selling dried and instant noodles, according to data compiled by Bloomberg. The company also makes cookies, which contributed to 23 percent of sales in 2010, the data show.
Corporate Secretary Yulianni Liyuwardi didn’t return a call to her mobile phone for comments on the company’s earnings and expansion plans. Sjambiri Lioe, a director at the company, couldn’t be reached when called at his office in Jakarta today.
Tiga Pilar’s shares have fallen 22 percent in the past year, under-performing the Jakarta Composite index’s 11 percent gain.