July 16, 2012 / 6:58 AM / 5 years ago

MIDCAP-Indonesia Nippon Indosari looks expensive on valuations

Indonesia's Nippon Indosari looks the most expensive among 17 stocks in the country's consumer staples sector, data from Thomson Reuters StarMine shows.

The data includes firms tracked by at least three analysts.

The food firm has low scores of 8 and 9 in Intrinsic valuation and Relative Valuation models respectively. The lower the scores in IV and RV models, the expensive the stock is.

At Friday's close of 4625 rupiah, the stock trades at a 54 percent premium to its intrinsic value of 2997 rupiah determined by StarMine.

Its SmartEstimate forward 12-month P/E is 26.5, a 43 percent premium to its peer average.

The company has a low score of 8 in Earnings Quality model, suggesting poor earnings sustainability.

The stock is up more than 20 percent over the past month, while the broader index is up more than 4 percent for the same period as of Friday's close.

CONTEXT:

StarMine's Relative Valuation model combines six different ratios that measure a company's valuation and then ranks it compared with all other stocks in the same region.

On its Intrinsic Valuation model, StarMine adjusts for the usually optimistic bias in analysts' EPS forecasts and uses the resulting growth rate and dividends to determine the valuation.

A low score on StarMine's Earnings Quality model signals poor earnings sustainability over the next 12 months based on a company's past operating performance. (Reporting By Patturaja Murugaboopathy; Editing by Gopakumar Warrier)

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