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Jul 24,2018 14:22:22

Dividend is the key driver
- If the cigarette stocks continue to be driven by relative dividend yields, GGRM should continue to outperform HMSP.
- 1H18 cigarette industry volume data suggest that HMSP’s volume declined 0.4% vs. GGRM's c.2% yoy volume growth during the period.
- Factoring in a 4% decline in HMSP’s 2018F earnings and GGRM’s higher 2019F capex (airport construction), we estimate GGRM’s yield at c.4% vs. HMSP’s 2.8%.
- Maintain sector Overweight. We now prefer GGRM over HMSP, though we maintain that HMSP is still the better long-term play on cigarette consumption trend.

Dividend yield as key to stock outperformance
In the past three years, GGRM’s share price has outperformed HMSP’s. Our analysis found the relative share price performances of the two stocks correlated strongly with dividend yields. GGRM started to outperform HMSP when its dividend yield rose sharply in 2016, resulting in higher returns vs. HMSP. The normalisation of GGRM’s capex and HMSP’s weak earnings momentum should allow the former to maintain a higher relative dividend yield, in our view.

Smokers continue to prefer high- and mid-tar cigarettes
According to Philip Morris International (PMI), the industry’s volume declined 1.5% yoy in 1H18, reflecting soft consumer purchasing power and higher-than-inflation excise tax hikes on cigarettes. Among the segments, high- and mid-tar cigarettes continued to support the industry’s growth, while hand-rolled and mild segments, and white cigarettes lost popularity.

GGRM consistently seizing market share
The consumers' smoking pattern plays into GGRM’s strength, as evidenced by its ability to expand its volume; much like what happened last year in 2017. Findings from our channel checks suggest that GGRM’s 1H18F volume grew c.2% yoy (vs. industry’s - 1.5%, according to PMI), despite c.8% yoy price increases. We project 1H18 sales growth of c.10% for GGRM vs. c.4% for HMSP. GGRM’s flagship, GG Surya, has been performing well (5M18 volume up 1.5% yoy, according to Nielsen).

HMSP remains a better long-term play
Indonesia smokers would likely shift back to the mild segment when purchasing power normalises; such is the trend globally. Economic uncertainties in the past few years and introduction of the mid-tar segment (effectively discounted cigarettes) led to market share shifting to ‘value’ cigarettes. Producers are incentivised to phase out such products eventually, in our view. HMSP’s firm position in the mild segment suffered, with its flagship A Mild hit (volume down 8% yoy in 1H18). Its 0.3% pt yoy market share gain in 1H18 to 33.2% was driven by low-margin products.

For now, GGRM is a superior stock
Assuming that value cigarettes stay trendy, GGRM should post relatively higher earnings CAGR of c.8% in 2017-20 vs. HMSP’s c.7%. We expect GGRM’s dividend yield in 2019F to remain superior to HMSP’s, unless its payout falls to less than c.43% (past three-year average: 72%). GGRM currently trades at 17x 2018F P/E, a discount of 52% vs. HMSP’s. Meanwhile, the government’s approval of e-cigarettes which have a 57% excise tax and could be sold from Jul 2018, has little impact on GGRM and HMSP, for now.


Dec 13,2016 12:00:07

Indonesia Tobacco: December ex-factory price update: +1-3% m-m
Tobacco: Indonesia
Reiterating our preference for HMSP on its strong brand equity 
According to our analysis, HMSP should face less ASP adjustment than GGRM next year due to cost pressure. ASPs for HMSP’s A Mild (c.60-70% of its total clove machine-rolled cigarette volumes [SKM]) are up by IDR124/stick YTD, vs. cost inflation of c.IDR97/stick. Given that A Mild has high brand equity, HMSP has managed to only lose 3% market share, while having a 13.5% ASP increase YTD despite aggressive pricing by competitors RMBA (Lucky Strike Mild and Dunhill Mild) and GGRM (Surya Pro Mild). Also, RMBA is doing a year-end promotion: IDR400/pack discount for Dunhill Filter and Lucky Strike Mild 16 and IDR300/pack discount for Dunhill Mild 20/16 and Lucky Strike Mild 12. Previously, we had expected GGRM to regain its earnings growth momentum once the company starts to catch up on price adjustments for its Surya Pro Mild in 2017. However, we see competition remaining intense, forcing GGRM to keep Surya Pro Mild ASPs low. Hence, the cross subsidy that GGRM is doing right now should continue, leading to a drag on its earnings.

Sensitivity analysis: GGRM earnings more sensitive to ASP changes
In order to quantify the price adjustment’s impact on the bottom line, we have conducted a sensitivity analysis for every 1% change in ASP. As almost 90% of GGRM volumes are from SKM, the company is more sensitive to ASP changes than HMSP (exhibit 8). We note that Surya 16 contributes c.40-50% to GGRM’s SKM sales volume, International 12 30-35%, and Surya Pro Mild c.10-15%. In other words, each IDR10/stick of additional profit to Surya 16 or International 12 could be used to cross-subsidize Surya Pro Mild by IDR30-40/stick. On the other hand, HMSP’s A Mild contributes c.70% to total SKM volumes, with a 12-stick pack representing about a fifth of total A Mild volume, slightly lower than U Mild’s sales volumes. Thus, every additional IDR10/stick profit at A Mild 16 could be used to cross-subsidize A Mild 12 or U Mild by IDR20-25/stick.

December ASP update: up 1-3% m-m at GGRM, RMBA and Djarum
Unlike last year, GGRM is taking a more cautious pricing approach. Effective 19 December 2016, GGRM plans to raise its Surya 16 ASP by 2.2% (YTD: +6.4%) to IDR1,153/stick, International 12 by 1.4% (YTD: +6.8%) to IDR1,175/stick, Surya Pro Mild by 2.6% (YTD: +10.1%) to IDR750/stick, and GG Merah by 2% (YTD: +7.3%) to IDR854/stick. We calculate that GGRM would need to pass on another IDR83/stick next year to maintain its margins (exhibit 5). Note that Surya Pro Mild was previously selling at par with Lucky Strike Mild 16 (IDR731/stick). Effective 1 December 2016, RMBA increased its Lucky Strike Mild 16 ASP by 3.4% to IDR763/stick, the first time since it was launched in April 2016. However, RMBA is having a year-end promotion until 19 December 2016 to sell at November old prices (IDR300-400/pack discounts). Thus, from 19 December 2016 RMBA will then follow the new price schedule (exhibit 10). HMSP, on the other hand, has not announced an ASP hike in December 2016. However, YTD the company has increased its ASPs for A Mild 16 by 12.4% and Dji Sam Soe 12 by 5.1%, more than enough to offset cost inflation in 2016. In addition, Djarum recently announced ASP increases for a majority of its products, effective 19 December 2016, with the key products being Djarum Super 12 +1.1% (+9.2% ytd), LA Bold +1.3% (+23.7% ytd), and Djarum Coklat +1.5% (+10.3% ytd).
Recommendation: HMSP is our top pick on better margin preservation
As RMBA still offers huge promotions, we prefer HMSP given that it has a higher brand equity in the Mild segment than GGRM.  Thus, we reaffirm our BUY call on HMSP, but slightly lower our 12-month TP to IDR4,600 (from IDR4,700), based on an unchanged 2017F PER of 40x following the 2% reductions to our 2017-18F earnings.  However, we believe GGRM’s valuation gap over HMSP remains compelling at these levels, with the shares trading at a 2017F PER of 17x, a 10% discount to their past-5-year trading PER. Therefore, we reaffirm our BUY call on GGRM and maintain our 12-month target price of IDR81,000 based on a 2017F PER of 21x, a 20% premium to its past-5-year PER, as we see margin improvement ahead from ASP hikes (exhibit 5). The risk to our call on HMSP would be adverse government policy on excise and health awareness. The risk to our call on GGRM would be more pricing competition in the Mild segment, especially from RMBA for its Lucky Strike Mild and Dunhill Mild, making it more difficult for GGRM to increase its Surya Pro Mild’s ASP.


Dec 06,2016 15:11:25

Lower cigarette production limiting customs and duties revenue

Lower cigarette production has limited the customs and duties revenue, which the government expects to reach IDR178tn by year end (10M16: IDR115.6tn). (Kontan)


Nov 28,2016 12:18:24

Heavy rain has ruined tobacco harvest in Central Java. Chairman of the National Commission to Save Clove Cigarettes (KNPK) Klaten branch, Aryanta Sigit estimated that the total losses experienced by tobacco farmers in Klaten amounted to over Rp10bn.

Comment: We have highlight this in our previous tobacco sector Indonesia Tobacco (Keep your tobacco dry!)


Nov 21,2016 11:44:17

Indonesia Tobacco: Currency safe haven
Tobacco: Indonesia

Upgrading: safe haven, competition easing and lower excise hikes
At this stage of the cycle, we upgrade our rating on the Indonesian tobacco sector from Neutral to OVERWEIGHT due to 3 factors: (1) Its safe haven status due to low USD-linked costs (ie, packaging only c.2% of COGS); (2) Easing competition from value-proposition brands on substantial price hikes from Djarum and RMBA (exhibit 20); and (3) lower excise hike in 2017 (exhibit 25). In our view, all of these positive catalysts bode well for industry growth as we head into 2017. Besides the sector’s low USD content in COGS, both HMSP and GGRM have solid balance sheets with no USD-denominated debt. That said, we believe the tobacco sector, whose earnings move by just 0.1% with every 1% change in the IDR on our estimates, offers investors a shield against FX volatility (exhibit 24). OVERWEIGHT.

GGRM over HMSP: Faster earnings growth at attractive valuation gap
Post the 3Q16 results, we adjust our 2016-18F earnings, particularly as we are seeing margin improvement at GGRM on the back of its recent aggressive ASP hikes to catch up with other cigarette players. We see its margins improving over 2017-18F and higher earnings growth compared to HMSP. Moreover, we believe GGRM’s valuation gap over HMSP is too compelling to ignore at these levels, with the shares trading at a 2017F PER of 17x, a 10% discount to the past-5-year trading PER (exhibit 23). Nevertheless, we still like HMSP for its high brand equity and strong corporate governance. Thus, we reaffirm our BUY call on HMSP, but lower our 12-month TP to IDR4,400 (from IDR4,800), now based on a 2017F PER of 40x (from 42x) due to softer earnings-growth momentum ahead. On GGRM, we reaffirm our BUY call and raise our 12-month TP to IDR81,000 (from IDR72,300), now based on 2017F PER of 23x (from 21x), a 20% premium to its past-5-year PER, as we see margin improvement ahead from ASP hikes (exhibit 5). Risks for HMSP: Greater public ownership requirement from the IDX due to limited free float of 7.5%, management change and stiffer competition. Risks for GGRM: Lower product demand due to extreme weather adversely impacting farmer incomes and robust competition.


Nov 16,2016 12:22:43

Cigarette: Inside the Pack – Nov’16

- Our cigarette price survey reveals that many stories are at play in the retail price movements this month, including Gudang Garam’s new ex-factory prices that are yet to be fully reflected in stores. Bentoel is also slating with lower prices through Lucky Strike Mild 12 and the recent retail price drop on Dunhill Mild 16, which might disrupt the market for mild players.

- GGRM’s new ex-factory prices are yet to be fully translated to retail price. GGRM’s ex-factory price increase last week translates to a mere 0.8% MoM retail price increase (versus average ex-factory price increase of c.2%). This is partly caused by some brands’ ex-factory prices that were not raised, and the retail price responses toward raised ex-factory prices may not be complete yet – retailers expect further adjustment in 1-2 weeks. Mirroring the ranks of ex-factory price increases, Pro Mild 16’s retail price leads with +2.6% MoM, followed by Surya 16 (+1.3%), and GG International 12 (+0.5%). For two consecutive months, GGRM ranks last in the monthly retail price movement at +0.5% and +0.8% MoM in Oct’16 and Nov’16, respectively.

- Bentoel is still in with the cheap. The strategy of lower-price products seems to be maintained until the last breath by RMBA. Their retail price increase has been rather muted this year, up by a mere 6.2% YTD (vs. average of 9.3%), where half of the increase comes from last month’s 3.5% jump. Now available at all convenience stores and street vendors we visited, Lucky Strike Mild 12 emerged as the cheapest cigarette, retailing at Rp10,000 – even below HMSP’s U Bold in some areas. Lucky Strike Mild’s widespread distribution comes at the same time as Dunhill Mild 16’s retail price drop of Rp1,000- 3,000/pack to c.Rp15,000 at our survey stores, priced within Sampoerna U Mild’s level. The price drop could be part of their trade promotion strategy, but would still be disruptive to the market, particularly the mild players.

- The fewer is the shield. HMSP’s overall retail price grew by 1.6% MoM in Nov’16. We notice that A Mild 12’s retail price increase is accelerating to 5% MoM this month, while it also has the highest year-to-date increase among all brands at 24.2% YTD (vs. average of 9.3% YTD). HMSP previously mentioned that double-digit EBIT growth target this year is maintained even if it comes at the expense of premium brands’ market shares through further price increase. Meanwhile, A Mild 16’s price was flat this month. Trailing behind A Mild 12 is Magnum Blue’s retail price increase (4.7% MoM in Nov’16; 13% YTD).

- A peek at WIIM’s 2017. We notice that WIIM’s retail price starts to grow at a slower pace behind HMSP in Nov’16 (0.9% vs. 1.6%, respectively), potentially signaling the strategy for next year as to maintain pricing points, given ample room for 1 bn more cigarettes.
- Banderol price increases are seen on three brands: Magnum Filter 12 (+Rp800 to Ro13,450); Sampoerna Kretek (+Rp275 to Rp10,350); and Djarum Coklat 12 (+Rp100 to Rp10,350).


Oct 25,2016 23:45:18

HM Sampoerna ($HMSP): 3Q16 results: Mostly on track
Revenue: in line with aggressive ASP hikes 
HMSP recorded 3Q16 revenue of IDR22,939bn, down 9.7% q-q but up 5.3% y-y (ASP rose by +3% q-q and +10.9% y-y). This translated into 9M16 top-line growth of 7.3% y-y, with an 11.3% y-y ASP hike. We observed declining volumes across three product segments: 

9M16 market share loss of 70bps 
Despite ASP growth of 11.3% y-y in 9M16, HMSP’s market share declined by 70bps to 34.5% against its other value-proposition brands (i.e., LA Bold by Djarum and Dunhill Filter by Bentoel [$RMBA]), mainly dragged down by some of its major product lines such as A Mild (-60bps y-y), Dji Sam Soe (-50bps y-y), and U Mild (-60bps y-y). On a more positive note, in the midst of an industry stick sales decline of 1.2% y-y in 9M16, HMSP saw a significantly higher market share for its A Mild 12 product (current: 2.4% market share) due to geographical marketing expansion. Although the costs of production for the A Mild 12 and the A Mild 16 are similar, the A Mild 12 is selling at a 13% discount to the A Mild 16. Thus, there was a slight correction in the A Mild 16 market share to 10.8%. HMSP is facing production capacity constraints for its A Mild 12 product. Following A Mild 12’s success, the U Bold cigarette line has seen a doubling of its market share q-q to 1.8%, despite having increased its ASP by more than 12% in the past 3 months. Therefore, we are seeing a shift in consumer preference toward cheaper products, indicating that the average consumer in Indonesia is price-sensitive. 

Aggressive promotions + high brand equity = double-digit EBIT growth 
We estimate that HMSP should only have needed to increase its ASP by about 8% to adjust for the 2016 excise tariff hike. However, the company has increased its ASP by 11.3%, paving the way for guidance of double-digit operating performance growth. This has resulted in a 40bps increase in GPM y-y. HMSP booked 3Q16 net profit of IDR2,933bn, down 3.2% q-q, but up 13.5% y-y. The reason for the robust y-y growth was the much higher interest income from its rights issue proceeds. As a result, 9M16 profit amounted to IDR9,081bn, up 19.5% y-y, in line with our estimate and marginally higher than that of consensus on higher interest income.


Oct 02,2016 14:34:53

Indonesia Tobacco: 2017 excise tax hike: Bad for health
Real excise hike higher than historical levels: A volume depressant
The government recently announced the 2017 excise tariff hike of 10.5% y-y (Bahana estimate: 10-12%). Given the low inflationary outlook ahead (Bahana: 3.3% inflation in 2016F; 3.8% in 2017F), the hike is considerably high, compared to levels seen in 2010-15 (exhibit 3), and is likely to adversely impact smokers’ purchasing power. Note that, as of 27 September 2016, the government has only received 54% of the FY16 excise revenue target, although this experienced an uptrend in 9M16 relative to 7M16 (exhibit 5).

August 2016 cigarette stick sales: -0.3% y-y
Based on the Nielsen retail survey, we observe a continued drop in August retail sales volume (-0.3% m-m) with a 0.3% m-m ASP growth (exhibit 8). This is attributed to the white cigarette (SPM) which was down 12.3% ytd and hand-rolled clove cigarette (SKT) (-4.9% ytd). On the other hand, we see a demand shift towards the machine-rolled clove cigarettes (SKM) that recorded a 5.5% growth for the full-flavour SKM and a flat growth for the SKM light segment.


Jul 27,2016 08:50:24
EARNINGS CALENDAR (Half Year 2016 - Estimated)

JULY 2016

Jul 25, 2016 :
$BBTN (Bank Tabungan Negara (Persero) Tbk PT)

Jul 26, 2016
$BDMN (Bank Danamon Indonesia Tbk PT)
$BMRI (Persero) Tbk PT Earnings Release - 4:00PM GMT+7

Jul 27, 2016
$AALI (Astra Agro Lestari Tbk PT)
$HMSP (Hanjaya Mandala Sampoerna Tbk PT)
$LPPF (Matahari Department Store Tbk PT)
$MPPA (Matahari Putra Prima Tbk PT)
$PTBA (Bukit Asam (Persero) Tbk PT)

Jul 28, 2016
$ASII (Astra International Tbk PT)
$BEST (Bekasi Fajar Industrial Estate Tbk PT)
$BJBR (PT Bank Pembangunan Daerah Jawa Barat dan Banten Tbk)
$DOID (Bloomberg)
$NCO (Vale Indonesia Tbk PT)
$JPFA (Bloomberg)
$PSAB (Bloomberg)
$SSMS (Bloomberg)
$SMGR (Semen Indonesia (Persero) Tbk PT)
$UNTR (United Tractors Tbk PT)
$UNVR (Unilever Indonesia Tbk PT)

Jul 29, 2016
$ASRI (Alam Sutera Realty Tbk PT)
$ADHI (Bloomberg)
$BSDE (Bumi Serpong Damai Tbk PT)
$BNGA (Bloomberg)
$BNLI (Bloomberg)
$BNII (Bloomberg)
$BKSL (Bloomberg)
$BHIT (Bloomberg)
$BISI (Bloomberg)
$CPIN (Bloomberg)
$CTRA (Ciputra Development Tbk PT)
$CTRP (Bloomberg)
$ELSA (Bloomberg)
$GIAA (Bloomberg)
$GJTL (Bloomberg)
$GGRM (Gudang Garam Tbk PT)
$NKP (Bloomberg)
$INTP (Indocement Tunggal Prakarsa Tbk PT)
$INDF (Indofood Sukses Makmur Tbk PT)
$ICBP (Indofood CBP Sukses Makmur Tbk PT)
$INDY (Bloomberg)
$KARW (Bloomberg)
$KAEF (Bloomberg)
$KIJA (Bloomberg)
$KLBF (Kalbe Farma Tbk PT)
$KRAS (Bloomberg)
$LPKR (Lippo Karawaci Tbk PT)
$LSIP (Perusahaan Perkebunan London Sumatra Indonesia Tbk PT)
$MAPI (Bloomberg)
$PWON (Bloomberg)
$PNBN, $PNLF, $PNIN (Bloomberg)
$PTPP (Bloomberg)
$RALS (Bloomberg)
$SMRA (Bloomberg)
$TBLA (Bloomberg)
$TLKM (Telekomunikasi Indonesia (Persero) Tbk PT)
$TOTL (Bloomberg)
$WSKT (Bloomberg)

Aug 1, 2016
$HRUM (Harum Energy Tbk PT)
$SSIA (Surya Semesta Internusa Tbk PT)

Aug 10, 2016
$ITMG (Indo Tambangraya Megah Tbk PT)

Aug 12, 2016
$EXCL (XL Axiata Tbk PT)

Aug 29, 2016
$ADRO (Adaro Energy Tbk PT)
$ANTM (Aneka Tambang (Persero) Tbk PT)
$BBRI (Bank Rakyat Indonesia (Persero) Tbk PT)
$ISAT (Indosat Tbk PT)
$PGAS (Perusahaan Gas Negara (Persero) Tbk PT)


Sep 13, 2016
$SMCB (Holcim Indonesia)

Jun 17,2016 08:44:44
Indonesia’s Top Stock Picker Likes Noodle-Maker, Tobacco Shares
By Harry Suhartono

(Bloomberg) -- Buying consumer stocks and avoiding banks
has proved a winning formula for the manager of Indonesia’s top-
performing share fund. To maintain returns, PT Samuel Aset
Manajemen is focusing on companies that are benefiting from a
rise in spending by lower-income people.
PT Indofood CBP Sukses Makmur ($ICBP), an instant noodle-maker, PT
Gudang Garam ($GGRM), a tobacco company, and PT Telekomunikasi Indonesia ($TLKM)
are among Samuel’s top picks, President Director Agus Yanuar
said in an interview in his office in Jakarta. They are
benefiting from an increase in consumer spending driven by
rising raw-material prices and policies to help poorer people,
he said.
“The rebound in commodity prices has helped lower-income
consumers,” said Yanuar. “That, combined with the decision to
lift the threshold for non-taxable income and the various
government assistance for education and health care, has boosted
Indonesia’s key raw-material exports including coal, tin
and palm oil have rallied this year, providing more work in
commodity-dependent areas like Sumatra and Kalimantan and having
a flow-on effect to local businesses. A sevenfold jump in the
amount earmarked for social security programs in this year’s
budget and a 50 percent increase in the level of income
Indonesians don’t have to pay tax on is also putting more money
in wallets.
Samuel Aset’s SAM Indonesian Equity Fund has returned 15
percent so far this year, beating all peers with assets of more
than 1 trillion rupiah ($75 million) and tripling the Jakarta
Composite Index’s 4.8 percent advance, according to data
compiled by Bloomberg.
Southeast Asia’s largest economy grew at the slowest pace
since 2009 last year and President Joko Widodo is attempting to
spur growth via infrastructure spending, pressuring banks to
lower lending rates and a planned tax amnesty, which the central
bank estimates could lure about 560 trillion rupiah of
undeclared income from overseas.
Samuel went underweight Indonesian banks after the
Financial Services Authority said in February that it would cap
deposit rates and force lenders to make similar reductions to
their loan rates, said Yanuar, who helps manage the SAM
Indonesian fund. The Jakarta Finance Index is the worst
performer among nine industry measures on the JCI this year,
declining 2.8 percent.
The Jakarta Consumer Goods Index has risen 11.4 percent in
2016. Indofood is up 24 percent, Gudang Garam has rallied 15
percent and Telkom has advanced 25 percent.
Jun 15,2016 10:02:07
Tax increase on tobacco import

Government is looking into plan to impose higher import tax for imported tobacco. This is likely to lead to higher COGS for major tobacco companies in Indonesia. We estimate 20-50% of tobacco raw materials are imported. $HMSP has higher proportion than $GGRM for imported tobacco leaves. On the other hand, clove price remain relatively mild and the tax risk is relatively limited given that 90% of global supply are from Indonesia.

May 30,2016 13:13:32
Plain cigarette packaging to put smokers off. The Health Ministry is pushing for plain packaging on all cigarettes sold in Indonesia to reduce the alarmingly high smoking rate.

Comment: Indonesia is a late-comer in terms of regulation on cigs with warnings pictorials only introduced in 2014. However, the trend is clear that Indonesia will follow other countries to restrict advertising on cigs and one of the ways is to implement plain packaging. We believe this will marginally benefit bigger players as they have much stronger brand equity. In addition, this will make things more difficult for a new player/product to enter the market. Of all the companies in Indonesia, HMSP is the one most prepared given Phillip Morris’ expertise in the more developed markets. 

May 09,2016 16:41:27
Gudang Garam (GGRM): Still shining

Maintain BUY with higher TP
We continue to like GGRM for: 1) its solid branding 2) its exposure to mass market, 3) potential for lower leverage as the capex cycle has ended. Reiterate BUY with TP of IDR85,000, which implies 21x PER FY17F or +1SD above 3year historical mean. We upgraded our FY16-17F earnings forecasts by 9-10% to incorporate better than expected profitability from continuous ASP hikes and lower raw material costs.

Expect stable volume performance
We estimate -2 to 0% YoY volume for GGRM over 1Q16 vs. –6% YoY for the industry, implying some market share gain. We expect the volume performance to hold up through the rest 2016 on the back of a lower base and potential improvement in consumer confidence. In the longerrun, we expect consumers to continue to shift to machine roll cigarettes, which will lead to more intense competition in the segment. GGRM’s dominant position in the regular machine-rolled segment should support the company’s effort to expand to the ‘mild’ segment, in our view.

Pricing power to support margin
We expect major cigarette companies, including GGRM, to pass on cost increases to customers. With ~15% YoY excise tax increase for 2016F, we estimate ~10% YoY hike in ASP. The lower raw material price and potential for lower financing costs are expected to provide some support to net margin despite increase in opex. A&P costs are likely to rise after the soft performance of ‘mild’ brands last year and rising competition.

Better FCF after capex cycle ended
As the capex cycle appears to have ended in 2014, we expect FCF to improve and lead to deleveraging in the medium-term. With lower leverage and interest rate, we forecast lower financing costs for GGRM (- 9% YoY in FY16F and –10% YoY in FY17F) and this is likely to support the company’s net margins over FY16-17F.

May 02,2016 13:30:23
Cigarette: Inside the Pack – Apr’16

Our monthly cigarette survey found that there was an average price increase of +2.5% MOM and +3.7% YTD for Apr’16 period. WIIM recorded another highest MOM price increase, while HMSP, GGRM, and Djarum recorded positive MOM ASP growths in Apr’16. We added a new banderol price analysis within this month's ‘Inside the Pack’ series.

- Apr’16: on the rise. While Mar’16's price increase for retailers has been soft, Apr’16's average price increase was more aggressive. We saw a 2.5% MOM increase in Apr’16 vs. only 0.5% in Mar’16. As of 4M16, the average cigarette price increase is 3.7% YTD.

- HMSP: still growing. HMSP’s price was increased by 2.3% MOM in Apr’16. The main driver of growth came from A Mild 12, which recorded 4.5% MOM increase. We suspect the high growth rate was caused by last month’s decline of 1% for A Mild 12. Sampoerna Kretek (Hijau) came in second with 3.9% MOM increase, as the brand continues to record positive price growth YTD. All in all, HMSP maintains its positive price growth of 4.6% YTD.

- GGRM: back in the green. GGRM recorded 2.3% MOM increase in Apr’16, from - 0.8% MOM in Mar’16. We think it is a normalizing effect from negative growth in the previous month. GG Surya 16 recorded the highest MOM growth of 4.4% in Apr’16, due to negative growth of 2.9% in Mar’16. Overall, GGRM's YTD growth is back in a positive territory, recording 2% YTD growth.

- Djarum: positive growth in Apr’16. Djarum's products have experienced 2.2% MOM ASP increase in Apr’16, from negative MOM growth in Mar’16. Djarum Super MLD experienced the largest ASP increase of 6.8% MOM. The large increase, we suspect, was due to the new banderol price (using 2016 excise) for the brand. Meanwhile, Djarum Black 16 continues to maintain its positive growth YTD, recording 0.6% MOM growth in Apr’16. The Group managed to improve its YTD price increase to 2.8% in Apr’16, from 0.6% in Mar’16.

- WIIM: another aggressive month. WIIM recorded another highest MOM ASP growth in Apr’16, with an average ASP increase of 3.8%. Diplomat 12 recorded the highest ASP growth for the Group, with 8% MOM ASP increase. The large increase in Diplomat 12 price was caused by one modern retail store that increase the price by 28.6% in Apr’16, as they have been selling the brand at below average market price since start of the year. In addition, Wismilak Kretek recorded a flat MOM growth in Apr’16 due to a normalizing effect of high ASP growth in Mar’16.

- Banderol Price. From our sample picks, Sampoerna A Mild 12 and GG Mild 16 still used the 2015 excise banderol in Apr’16. We found that Djarum Super MLD and Djarum Black has started using the 2016 excise banderol, wherein they have banderol price increases of 25% and 13% respectively (vs. 2015 banderol price). Worth noting is that GG International has increased its 2016 banderol price by 4% MOM, from Rp13,000/pack in Mar’16 to Rp13,500/pack in Apr’16.


May 02,2016 12:13:20
Bisnis Indonesia memberitakan Meski sebagian masih di bawah konsensus, kinerja emiten berkapitalisasi pasar raksasa atau big cap sebagai lokomotif lantai bursa mulai melaju pada kuartal I/2016.
emiten rokok PT Gudang Garam Tbk. (GGRM) menjadi jawara dengan pertumbuhan laba bersih yang dapat diatribusikan kepada entitas induk mencapai 32,09% (year-on-year/yoy) senilai Rp1,69 triliun.
Sebaliknya, raksasa otomotif PT Astra International Tbk. (ASII) harus terpuruk dengan koreksi taba 22,04% menjadi Rp3.11 triliun ditemani oleh PT Unilever Indonesia Tbk. (UNVR), yang labanya juga turun 1,36% menjadi Rp1,57 triliun. (Lihat tabel)
Kinerja GGRM juga mengejutkan lantaran lebih tinggi 36,56% dari proyeksi konsensus yang dirangkum Bloomberg. Sementara itu, kinerja ASII awal tahun ini justru lebih rendah 24,23% dari proyeksi konsensus.
Berdasarkan data yang dihimpun Bisnis, hanya PT Bank Mandiri (Persero) Tbk. (BMRI) yang belum merilis kineria keuangan kuartal I/2106 dari 10 emiten big cap.
Analys KDB Daewoo Securities Indonesia Heldy Arifien mengatakan pertumbuhan kinerja emiten berkapitalisasi pasar raksasa itu bisa menjadi penggerak indeks harga saham gabungan (IHSG). Ini terutama dari saham sektor barang-barang konsumsi seperti PT Unilever Tbk. (UNVR). PT Hanjaya Mandala Sampoerna Tbk, (HMSP), dan PT Gudang Garam Tbk, (GGRM) yang dalam beberapa pekan ini menjadi penggerak indeks.
"Sektor perbankan yang menjadi bobot 30% terhadap IHSG masih tertahan karena adanya sentimen negatif terkait pemangkasan margin. Beberapa kinerja emiten big cap akan menjadi mothers minimal sampai kuartal I/2016
Dia menilai, dari katalis yang ada, termasuk kinerja emiten kuartal I/2016, dapat mendorong pertumbuhan ekonomi ke area positif. Bila pertumbuhan ekonomi membaik, dia optimistis IHSG bakal menembus level 5.000 pada paruh pertama tahun ini.
Apalagi, transaksi perdagangan di lantai bursa juga diprediksi meningkat seiring dengan rencana diberlakukannya fraksi harga yang baru dengan lima kelompok harga
Kendati demikian, tembusnya level psikologis 5,000 bakal bergantung pada kepastian rencana pemerintah untuk memangkas margin bunga bersih pada sektor perbankan, Bila rencana itu batal diimplementasikan, IHSG dipastikan berjalan mulus menembus level 5.000.
Menurutnya, sektor yang diproyeksi akan moncer pada tahun ini adalah properti dan consumer goods. Adanya pemangkasan suku bunga acuan (BI Rate) dan implementasi pengampunan pajak (tax amnesty) dipastikan akan melonggarkan likuiditas.
Pertumbuhan likuiditas itu, katanya, akan mendorong meningkatnya daya beli masyarakat. Sisi lainnya, dana masuk dari pengampunan pajak juga diperkirakan menggerakkan kinerja emiten infrastruktur

Apr 20,2016 10:03:29

HMSP: Weak 1Q16 Volume                                    

* 1Q16 Volume -10%qoq, -9.2%yoy. Market share down from 35.4% in 1Q15 to 34.1% in 1Q16.                                       

* Industry 1Q16 Volume -5.6%yoy, likely from combination of weak economy and aggressive price hikes in the period.          

* Much lower than consensus expectations of flat or low-single digit growth in FY16.


Apr 04,2016 14:44:22
Gudang Garam - An unfiltered experience
Our BUY thesis on Gudang Garam ($GGRM) has been based on two assumptions: strong earnings and a slowing capex cycle. The strong 4Q15 results last week only reinforces analyst Robert Pranata’s BUY conviction on the stock.  This morning he upgrades earnings by 2%-3%, already ahead previously, this brings our GGRM numbers to 15% ahead of FY16 consensus.
Key issues:
Margin expansion. GGRM posted Rp6.4trn of net profit in 2015, 107% of 15CL and 115% of consensus. While sales came inline with our expectations, gross and Ebit margin came 2% above ours and 10% above consensus estimates. GGRM’s strong margin in 4Q15 was driven by its aggressive price increase in 4Q15 and strong performance of its higher margin products (machine-made full flavours and hand-rolled)
Capex cycle has peaked.  Capex as % to sales also dropped from 4.1% in 3Q15 to 3% in 4Q15. This is in-line with our forecast and we estimate that GGRM’s capex will decline to Rp1.8tn (US$136mn) in 16CL and Rp1.5tn (US$114mn).
What about taxes?  Robert assumes higher excise tax rate for 17CL as we believe the government is more likely to have a higher increase for excise next year, rather than increase this year’s excise tax further.
Taking all of this into account, Robert upgrades GGRM’s earnings 2%/3% for 16/17CL and increase our target price from Rp78,000 to Rp80,000.  GGRM remains one of our key BUYs.
Mar 22,2016 14:14:13
Do not enter.. wait until the next BUY SIGNAL

Feb 29,2016 17:41:59
Early sign of reversal (SELL)

Feb 04,2016 13:36:29
Great Stock to keep
Jan 29,2016 11:25:55
PT Gudang Garam Tbk ($GGRM) akan menaikkan harga rokoknya hingga Rp300 per bungkus.
Jan 29,2016 11:20:10
$GGRM 20M akan keluarkan dana
Jan 29,2016 11:17:40
PT Gudang Garam Tbk ($GGRM) mempertimbangkan untuk stock split lantaran harga per saham yang cukup mahal.
Jan 29,2016 11:17:11
PT Gudang Garam Tbk ($GGRM) mempertimbangkan untuk stock split lantaran harga per saham yang cukup mahal.
Jul 31,2015 10:09:49
$GGRM BUY 44,000 - 46,000 CUT LOSS BELOW 44,000 TARGET 58,000

Jul 01,2015 09:35:32
Dividend Rp. 800

Below is the schedule of Cash Dividend distribution:

1 Tanggal Cum Dividen 03 July 2015

2 Tanggal Penentuan 08 July 2015

3 Tanggal Pembayaran 30 July 2015

May 31,2015 12:41:26
Indonesia Top 10 companies by market cap


May 25,2015 12:56:41
Tunggu beli di 45000 - 44000. CUT LOSS di bawah 45000. Target 54000.
May 21,2015 21:11:28
Our top picks: 5 mass consumption, 3 infrastructure related, 1 bank, and 1 industrial property. Top picks in Indonesia (in alphabetical order) 1 ADHI Adhi Karya 2 BBRI Bank Rakyat Indonesia 3 BEST Bekasi Fajar 4 GGRM Gudang Garam 5 INDF Indofood Sukses 6 JSMR Jasa Marga 7 KLBF Kalbe Farma 8 PTPP Pemb Perumahan 9 TLKM Telkom Indonesia 10 TELE Tiphone Mobile Indo Source: Maybank Kim Eng
May 18,2015 13:47:27
GGRM BUY near support at 44,000. First Target 54,000
May 11,2015 12:57:22
Indeks Harga Saham Gabungan (IHSG) menguat +0,1% (+3 poin) di level 5184,45 poin pada penutupan perdagangan sesi 1, Senin (11/5). Indeks LQ45 naik +0,15% ke posisi 900. Jakarta Islamic Index (JII) naik +0,27% ke posisi 699 poin. Indeks Kompas 100 naik +0,19% ke level 1.134 poin. IDX30 naik +0,15% ke level 466 poin. Pemodal asing membukukan transaksi net sell (jual bersih) -Rp37 miliar. Transaksi yang tercapai Rp2,136 triliun dengan volume trading sebanyak 5,755 miliar saham. Sektor: Agri +2,07% Mining +1,70% Properti -0,69% Infrastruktur +0,16% Finance +0,04% Trade -0,14% Manufaktur -0,17% Consumer -1,17% Basic ind -0,07% Misc-ind -0,25% Kini sektor agro dan mining menjadi penopang utama laju IHSG pada perdagangan sesi siang awal pekan ini. Saham agri ditunjang oleh naiknya AALI +3,07%. BWPT ++3,75%. DSNG +1,41%. GZCO +1,12%. SIMP +2,34%. SSMS +1,01%. Adapun saham-saham mining yang bergerak naik antara lain: ADRO +5,23%. ANTM +0,63%. ARTI +4,44%. HRUM +2,97%. INCO +1,24%. ITMG +5,51%. Kelompok saham properti bergerak negatif seiring terbitnya Revisi PMK No 90 /PMK.03/2015 tentang pengenaan pajak barang super mewah (PPh 22) untuk properti. Saham-saham properti yang melorot adalah: APLN -1,73%. BSDE -0,28%. CTRA -2,92%. JRPT -7,34%. LPCK -0,90% . LPKR -1,19%. Adapun sektor yang turun paling dalam adalah consumer -1,17%. Koreksi consumer dimotori saham: DVLA -1,11%. KAEF -0,84%. GGRM -0,16%. TSPC -1,67%. ULTJ -2,35%. UNVR -0,06%. Bursa Asia Sentimen kebijan Tiongkok yang memangkas suku bunga menjadi sentimen utama bagi market regional. Bank Sentral Tiongkok (People`s Bank of China (PBOC) menurunkan suku bunga kredit dan deposito bertenor 1 tahun sebesar 25 bps. Indeks Nikkei naik +1,27% (+245,32 poin) ke posisi 19.624,51 poin. Indeks Hang Seng naik +0,50% (+132,29 poin) ke level 27.714,63 poin Indeks Shanghai naik +1,18% (+49,62 poin) ke posisi 4.255,54 poin Indeks Straits Times +0,46% (+15,72 poin) ke level 3.467 poin (pukul 12.00 WIB).
May 05,2015 12:52:42
GGRM kalau mau tunggu beli di support. Support 44000 - 48000 dengan target terdekat di 54000
Apr 29,2015 08:11:40
We are upbeat on Gudang Garam. We believe that the market is overreacted on the worries on the excise tax hike and higher VAT. Stock has been underperforming the JCI this year by 17%. We believe that if this happens, GG will be able to pass it through as it has consistently done in the past. Further being one of the largest player with strong brands and working capital capability, GG should in fact be able to gain market share as the increase in tax will squeezed out the smaller players. Shift of consumer preference to machine made versus hand rolled, and majority of GG products are on machine. This resulting in a market share gain last year, and despite of a tough environment, which volume seen grew 5% YoY whilst industry reported a negative growth. Shift of preference to machine due to the aging profile of the handrolled smokers which are preferred among the oldies. GG has demonstrate that it has pricing power. Its ASP has been risen faster than the increase in the excise costs. Because of the volume and the price increase, the company's profitability improves. Clove prices which is the major raw materials for kretek cigaretes is seen stable. At the same time, its labor cost also seen lower since its products are mostly machine made, so they are using less labor. Completion of the expansion resulting in lower capex, which in turn it will see a positive free cash flow starting from this year onwards. The company has been spending massively on capex in the last three years on the machine and modernization. As such, we revised up our earnings by around 7% for this year and next year. We believe that the stock's valuation is attractive, trading at less than 16x earnings this year and 14x earnings next year. The weighted average of global tobacco companies are trading on 20x this year earnings, with much lesser growth, and compared to the other Indonesia consumer names, this is the cheapest. While we also look at the relative P/E, GG is trading on its lowest of the five-year historical average. On the base of 20x earnings this year, our new target price is at Rp66,800 or at 26% upside from current price. We upgrade our rating to Outperform. GGRM
Apr 22,2015 23:18:13
Indonesia cigarette industry appears to have strong growth over 1Q15 despite overall consumption slowdown, with estimated volume growth of 6% y-y based on Philip Morris International latest results. The consumers’ shift to machine rolled cigarette (1Q15 volume est. +9% y-y) from hand rolled cigarette (est. -3% y-y) also continues and we believe this will benefit companies like GGRM, which has 85% around volume contributed by machine-rolled products. White cigarette also appears to have lost market share to clove cigarette (GGRM has around 100% volume from clove cigarette).
Apr 22,2015 23:07:15
HMSP announced 1Q15 earnings of IDR2.9t (+5.2% yoy) and net revenue of IDR11.94t (+12% yoy), boosted by machine-rolled cigarette sales. However, operating profits only grew by 9% yoy, resulting in lower margins. Our view: We believe that the new brand’s lower margin is driving the strong volume growth (27.7bn cigarettes in 1Q15 from 25.5bn cigarettes in 1Q14) and market share gain to 35.4%. However, we expect limited margin pressure for Gudang Garam (GGRM) as it has a stronger foothold in the mid-price segment. We maintain BUY for Gudang Garam.
Quotes delayed, except where indicated otherwise.
71,750.00 1750.00 (2.50%)
Gudang Garam Tbk.
Last Update 02:54:11