Reuters: Hot Stocks: STOCKS NEWS INDONESIA-UBS cuts Indofood CBP to neutral

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STOCKS NEWS INDONESIA-UBS cuts Indofood CBP to neutral Sep 5th 2012, 04:57 Wed Sep 5, 2012 12:57am EDT UBS downgraded PT Indofood CBP Sukses Makmur Tbk to 'neutral' from 'buy,' and said higher wages and raw material costs could take a toll on the packaged-food maker's margins. Wages were up 48 percent year-on-year in the second quarter, and an increase in flour prices could also impact the coming quarters, UBS analyst Bonny Setiawan wrote in a note on Wednesday. "We expect noodle volume growth to slow in Q412 and think costs will rise," Setiawan said. The brokerage maintained its 7,000 rupiah target price on the stock and said the market has high expectations from the newly formed joint venture with Japanese beverage group Asahi . Earlier in July, Asahi entered into a partnership with Indofood CBP worth up to 2 trillion rupiah ($213.1 million) to make non-alcoholic drinks, aiming to tap growth of more than double by 2020. "The dairy business will struggle to find its competitive edge, and uncertainties on the JV linger," the brokerage said. At 11.55 a.m. (0455 GMT), shares of the company were down 0.76 percent at 6,500 rupiah, while the broader index was down 0.41 percent. 1156 (0456 GMT) (Reporting by Andjarsari Paramaditha)

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