Indofood Agri +3.1%; Wed Selloff Overdone - DMG

[Dow Jones] Indofood Agri Resources (5JS.SG) +3.1% at S$2.66, recovering part of Wednesday's 10.1% tumble, as bargain hunters swoop in. DMG, which has Buy call with S$3.34 target, says earlier selloff due to higher Indonesia CPO export tax levy and weaker Malaysian CPO exports data, not warranted as macro outlook remains positive; "we believe that IFAR will continue to enjoy the present conducive environment, especially with its high ratio of mature acreage." But thin volume suggests investors still watchful of potentially more negative surprises, indicating this week's highest close of S$2.87 unlikely to be disturbed.

On the chart, there is a bearish divergence, likely we have seen a short term high and more correction in store in the coming days for Indo Agri. In fact Wilmar and First Resources are also exhibiting this same scenario. Only Golden Agri among the CPO stocks is spared this scenario.