1Q09 results within expectations. Net profit surged by 49% to US$4.3m, largely on absence of a negative impact of hedge re-designation (US$2.05m) seen in 1Q08. Revenue grew by 12.9% y-o-y to US$281.8m due to contribution from both its Cocoa Ingredients (US$217.8m, +14.3% yoy) and Branded Consumer (US$64.0m, +8.5% yoy).

Core operations countering European losses. Gross margins for BC division dipped by 2ppt to 28.9%. This is largely due to larger contribution from 3rd party brands on the back of new agency lines secured. Regional countries account for 31.7% of revenue, up from 26.7% in 1Q08 as a result of a 28.8% growth. CI (Asia & Latin America) showed a good performance with EBITDA, surging 50% to US$7.8m. EBITDA/mt (6-mth moving average) improved to US$189/mt, thanks to higher product pricing and ability to pass on price increases. However, its European operations registered a larger EBITDA loss of US$2.4m (from US$1.97m) as the facility was producing generic grade cocoa ingredients and semi-finished products.

Downgrade to FV. TP raised to $0.53, as we raised our valuation to 12x FY09F PER (from 8x previously), in line with peers in view of normalization of equity risk premium. But, the stock has doubled since Mar along with the market optimism for a 2H recovery. Valuation now looks rich at c.15x on current year's earnings, in our view. As such, we downgrade to FV.