(PT Indofood CBP Sukses Makmur Tbk.)

Transcription

1 The 3 rd Padjadjaran Financial Festival Investment Analysis Paper (SOCIETY) (M.H THAMRIN) (PT Indofood CBP Sukses Makmur Tbk.)

2 Indofood CBP Sukses Makmur Tbk. (ICBP) 16 AUG 2016 PRICE : Rp8.775 TP : Rp BUY UPSIDE POTENTIAL 18% Company Overview Indonesian population growth will contribute to ICBP product demand which is it product needed by all over indonesian citizenship. Indonesia is one of bigest country with higher consumer spending. Now indonesian population is about 260 million certainly needed of cosumption will increasing, we believe ICBP would fulfill our needed as a consumer good company. Now ICBP has been proved their existence with their achivement to distributed their product (indomie) all over the world, in 2015 they sell their product to more than 60 country and known by indonesian as a best local brand Investment Merit More innovative. ICBP has launch few new product indomie real meat, indomie bite mie snack, and another innovative product from snack, dairy, and noodle divisions and have a good response from their consumer, we believe this product will give contribution to expand ICBP sales Profit and sales in 2016 still stay in line. Sales on Q2 Rp.18,18T increased 9,8% from previous period Rp.16,66T. Operating profit grow up to 24,9%yoy Rp2,74T of course that will be moving net profit margin up becomes Rp 1,98T or increased 13,9% YoY from previous period. We believe that positive corelation between ICBP sales with growth of related distributorship/supply mainly to PT Indomarco Adi Prima (Indomaret) bring positive effect to ICBP sales in the future that represents 60.24% in 2015 and keep growing for next year.in 2015 Indomaret had more than store all over indonesia and We saw some good potential for Indomaret to expand their store. Risk Factor Increasing on wheat prices is just for anticipation ICBP must be aware about price of wheat, the price almost touch lower price for over ten years ($375) we assumed if the price will be rebound to it nearest resisten ($600) it will give a big impact to COGS of noodle product and it will reduce ICBP margin. And adversely impact the Company s financial position.

3 Business Description 5% 2% 6% SALES CONTRIBUTION NOODLE 6% DAIRY SNACK FOOD 17% 64% FOOD SEASONING NUTRITION AND SPECIAL FOOD BEVERAGES Source: company Impressing all of the world ICBP is one of bigest consumer goods corporation that following its parent company PT Indofood Sukses Makmur Tbk. ICBP well know as their favourite product Indomie that loved by their consumer all over the world. ICBP was established in September 2009 and listed on the IDX on 7 October At present, Indofood remains its majority shareholder with an ownership of about 80%. This allows ICBP to enjoy continued synergies with other Indofood companies NOODLES produces and markets a range of instant bag noodles, instant cup noodles, egg noodles and instant vermicelli. DAIRY produces and markets dairy products such as sweetened condensed milk and creamer, liquid milk (including ultra-high temperature, sterilized bottled and pasteurized liquid milk), powdered milk, ice cream and butter. SNACK FOODS produces and markets a range of western and contemporized traditional snacks, as well as biscuits.food SEASONING produces and markets culinary products that include soy sauce, chilli sauce, tomato sauce and instant seasonings, as well as cordial syrup. NUTRITION AND SPECIAL FOOD produces and markets various cereals and biscuits for infants and children, cereal snacks for kids, cereal drinks for young adults, as well as milk products for expectant and lactating mothers. BEVERAGES products and markets readyto-drink tea and coffee, carbonated soft drinks and fruit juice drinks, as well as packaged water.the Company s operations are also supported by the PACKAGING DIVISION which produces both flexible and corrugated packaging.

4 In Million In Trillion The 3rd Padjadjaran Financial Festival Industry Overview Household consumption improving. indonesian people well known by their high consumption habit. Based on last 5 years indonesian consumption data for food and beverage has growing, so we believe that consumption in 2016 improve to (assumption based on CAGR) consumption for food and beverage Source: BPS, Society World instant noodle demand. Indonesia is one of country with high noodle demand ind the world or second place of higher instant noodle demand after cina with Per Capita Consumption 51,9 servings above average world consumption 13,5 servings in a year. Based on World Instant Noodle Association (WINA) Fried noodles called Mie Goreng are the most popular type of noodle with Indonesia consumers WORLD INSTANT NOODLE DEMAND China / Hong Kong Source: WINA, Society Indonesia

5 Financial Analysis Turn Over AT IT 50 NET SALES F 2017F 2018F Source: Company, Society F 2017F 2018F 2019F Source: Company, Society ICBP s sales was growing up from We assumed that it will be growth countinuously until 2019 and it will be followed by increasing Turn Over Ratio. Profitability Ratio 30.00% 20.00% 10.00% 0.00% F 2017F 2018F GPM NPM NPM Source: Company, Society GPM ratio has increase from 27% in 2014 to 30% in 2018F, OPM increase at 11% in 2014 to 15% in 2016F remain stable from 2016F to 2018F 14%, indicated by increasing sallary and wages expense and also advertise expense so the movement of NPM adjust the movement of OPM remain stable in 2016F and 2017F and increasing at 2018F.

6 We predicted of ROA and ROE will increase. Based on our forecast ROA will slowly grow to 13% in 2016 and remain stable untill 2018, thus ROE rapidly grow in this year to 21% and slowly decrease to 20% in 2018 indicated by ascent of equity 25% 20% 15% 10% 5% ROE ROA 0% F 2017F 2018F Source: Company, Society Laverage Ratio ICBP DAR in 2015 was 38% or that was decrease from 2014 it was 44% and we assumed that will be stable on 40% until 2018F. DER in 2015 was 60% or that was decrease from 2014 it was 72% so we assumed DER that will be stable under 60% until 2018F DAR DER F 2017F 2018F Source: Company, Society Liquidity Ratio Liquidities ICBP proved that they can remain their liquidity. Current Ratio settled in 200% untill 2015, so we conclude ICBP keep remain their Current Ratio to 2018 followed by Quick Ratio movement adjust CR, it indicated that they did goood managing on manitenance inventory CR QR F 2017F 2018F AXIS TITLE Source: Company, Society

7 ICBP 2012A 2013A 2014A 2015A 2016F 2017F 2018F GPM(%) OPM(%) NPM(%) 10,6 9,1 8,5 9,5 11, EPS(Rp) P/E(x) ,0 26,7 20,3 ROA(%) ROE(%) DAR(%) 32,5 37,6 41,7 38,3 36,6 38,2 38,7 Valuation Source: Society

8 Explanation Histories Forecast Price Rp8.725 Rp EPS Rp283 Rp337 P/E 31x SD+1 30,6 Risk Free(Rate of Repo) 5.25% % Profit/Lose +18% We used P/E Band valuation method. Since 2011 ICBP was trading on range P/E 15x until 35x with P/E+standard deviation 30.6x on 16/08/2016 ICBP P/E is 31x with sales growth 9.8% and we predicted EPS FY 16 ICBP will increase to Rp337 and forward P/E x. So target price ICBP Rp with potencial profit 18% we used Repo Rate as branch marking. Source: Bloomberg, Society Except using P/E band we used P/E comparation we compare ICBP P/E with other consumer stock with big market capital (UNVR, KLBF, GGRM, HMSP) and we found average P/E 36.43x. With Forward EPS 2016 of ICBP Rp337 so the target price of ICBP is Rp

9 Investment Risk SWOT analysis Strength Weakness bigest instant noodle producer in the world they import for their raw material that always make a new inovation for their product give impact to cost of good sold if due understand about consumer taste to unstable currency Opportunity Threat develop their product to international they have to fight with many market negative issue about their main new market segmentation product s (Indomie) ingredient People health awareness. We assumed Higher GDP of indonesian will increasing willingness to balance between health and consuming healthy food in the future in indonesia. People will concern about their health and change their lifestyle to healthy lifestyle with consumption organic product and avoid instant food Government plans to have imposed a controversial excise on plastic packaging. Earlier this year the government had already suggested IDR 200 excise duty for food and beverage products wrapped in plastic packages.as consequences excises would increase prices paid by end-customers, reducing people s disposable income and lowering their purchasing power, of course it will impact to ICBP sales. Investment Summary As a favourite brand for indonesian. We believe indomie still loved by people all over the world, proved by award 1. BRAND FINANCE PLC BRAND RATING 2015 Indomie, Best Intangible Brand Value 2. BADAN POM AWARDS 2015 Food Seasonings Division, Appreciation for the Effort to Protect Consumers through Processed Food Production Compliance and Distribution, as well as Effort to Enter into Global Market through Export 3. INDONESIA WOW BRAND 2015 Indomie, Gold Champion in Pouch Noodles Category

10 Dairy division, profitable business. Dairy business became prospective in indonesia based on research by MARS about Study on Industry & Market of Milk Drink in Indonesia consumption of milk product has increase with average 11.41%/years, so we conclude milk business are very potential for Indofood CBP in the future. source:marsindonesia.com Dairy consumption in indonesia Source: marsindonesia.com Consumption volume (ton) Leading market share composition in Indonesia Company Indofood Sukses Makmur Wings Group Conscience Food Holding ABC President Indonesia Jakarama Tama Medco Group Nissin Foods Holdings Co Ltd Delifood Sentosa Corp Source: JP Morgan there is so many new players on instant noodle bussines, but to takeover Indofood CBP consumer that means they have to extra hard to try. Based on in 2014 Indomie own 72% market share of instant noodle in Indonesia. So we possitive that ICBP is still unbeatable brand beacause they had brand equity and suitable for indonesian consumer.

11 Wheat price surprisingly contribute to higher margin of noodle product. For the last 5 years wheat price keep decreasing to it lowest price, it give oppurtunity to ICBP to remain their COGS, in the other side indonesia inflation keep stable so ICBP could increase their product price and expand their margin. So higher sales prices in combination with cheaper prices of raw materials means double advantage for the company. Sumber: Nasdaq.com Source: ChartNexus, Society Technical Analysis: we used indicators MAE10,13 and standar MACD. ICBP is Up- Trending position because the price is growing countinually up and it was confirmated by MACD and MAE indicators

12 Appendix Appendix 1 : Source; Annual report,society Team SHAREHOLDERS SHARE % PT Indofood Sukses ,53% Makmur Tbk COMMISSIONERS & - - DIRECTORS Public (with ownership ,47% interest below 5%) Total % Appendix 2 : Source; society team Source: Yahoo finance, Society

13 in thousand The 3rd Padjadjaran Financial Festival Appendix 3 : Source indonesian population F 2025F 2030F 2035F in years Source: BPS, Society Appendix 4 : Income statement

14 Disclosures: Ownership and material conflicts of interest: The author(s), or a member of their household, of this report does not hold a financial interest in the securities of this company. The author(s), or a member of their household, of this report does not know of the existence of any conflicts of interest that might bias the content or publication of this report. Receipt of compensation: Compensation of the author(s) of this report is not based on investment banking revenue. Position as a officer or director: The author(s), or a member of their household, does not serve as an officer, director or advisory board member of the subject company. Market making: The author(s) does not act as a market maker in the subject company s securities. Disclaimer: The information set forth herein has been obtained or derived from sources generally available to the public and believed by the author(s) to be reliable, but the author(s) does not make any representation or warranty, express or implied, as to its accuracy or completeness. The information is not intended to be used as the basis of any investment decisions by any person or entity.

15 The 3 rd Padjadjaran Financial Festival Investment Analysis Paper Competition SCORING SHEET (Filled by Judges) SECTION MAXIMUM SCORE SCORE Business Description 10 Industry Overview 15 Financial Analysis 20 Valuation 20 Investment Risk 15 Investment Summary 20 Total 100 Bandung, 2016 (..)