Shares of PT Indofood Sukses Makmur Tbk, the world’s biggest instant noodle maker, fell as much as 3.4 percent to 5,700 rupiah after its Singapore-listed subsidiary, China Minzhong Food Corp Ltd, came under attack by a short-seller on Monday.
China-based vegetable producer China Minzhong was hit after California-based Glaucus Research Group issued a report alleging the company misled investors about sales to its biggest customers.
Indofood owns 29.3 percent in Minzhong Food after it doubled its stake in March, buying 14.4 percent for S$85 million, to expand its presence in the ethanol and sugar industries.
Indofood shares fell 5.6 percent on Monday.
“Despite fraud accusation newsflow on China Minzhong, we remain upbeat on Indofood’s outlook due to limited downside, as we believe the negatives for Minzhong’s investment (account for 3 percent of Indofood’s market cap) and agribusiness already in the prices,” Mandiri Sekuritas analyst Herman Koeswanto said in a note on Tuesday.
Mandiri cut its target price on Indofood to 7,500 rupiah while keeping its “buy” rating.
Indofood shares were down 1.69 percent at 5,800 rupiah. The broader Jakarta Composite Index was down 3.06 percent.
1301 (0621 GMT) (Reporting by Andjarsari Paramaditha; Editing by Anupama Dwivedi)