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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.


Feb 22,2017 11:24:38

Indonesia market update: Here comes the rain
Ahok, floods & stocks

Bad news for Ahok in the lead-up to the Jakarta Governor race: In spite of efforts by Jakarta’s governor, Basuki “Ahok” Tjahaja Purnama, to prepare for and prevent flooding, 54 areas around the capital were paralyzed as water prevented travel (exhibit 3-4) given the water depth of up to two and a half meters in some places on the back of around 180mm rain intensity (2016: 157mm) in the past 24 hours. The weather bureau (BMKG) predicts the peak intensity of La Nina to stay until March 2017.  
2nd round Jakarta Governor campaign has started early: Dressed in a red parka (exhibit 2), Anies, Ahok’s competitor in the final round of the Jakarta Governor race, has managed to capitalize on the floods to raise his popularity ahead of the planned campaign scheduled for 6-15 April 2017.

Demonstration still took place despite flooding: The Jakarta floods did not deter an estimated 10,000 protestors (although much lower than the 100k participants previously forecast) from turning up in front of the parliament (exhibit 1), asking the government to remove Ahok from his Governor post. The rally was reportedly headed by Muslim forum FUI.    

Positively affected stocks: While all distribution channels are adversely affected by the floods, we believe there are sectors and stocks that could perform better than others under these conditions. Siloam Hospitals ($SILO) should see increased traffic as people get sick while the pharmaceutical sector is also likely to see some uptick from higher purchases of medicine to treat wide-ranging illnesses such as flu and skin diseases, benefiting Kalbe ($KLBF) and Sido Muncul ($SIDO). Additionally, during floodings, households and evacuation centers typically stock up on staple foods such as noodles, which would benefit Indofood Consumer Branded Products ($ICBP). During these times, smokers also have the propensity to smoke more, so we could see increased stick sales for Sampoerna ($HMSP). Within the commodities space, assuming continued downpours at Sumatra’s plantation estates, higher CPO prices might occur due to decreased output. This would benefit our favored plantation plays: Eagle High ($BWPT) and Tunas Baru ($TBLA).  

Adversely affected stocks: With the rains, cement, construction and coal companies could face operational delays. We also expect bread maker Nippon Indosari ($ROTI) to suffer (c.70% of sales in Greater Jakarta), as spoilage may be an issue due to the fresh nature of its products. Retailers could also be affected by the reduced traffic, particularly Ramayana ($RALS) whose low-end target customers lack cars for commuting. Traffic jams caused by flooding should spell bad news for transportation, adversely affecting both Blue Bird ($BIRD) and Express ($TAXI), as well as Garuda Indonesia ($GIAA), as flights may be delayed or cancelled.   

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 23,2016 10:04:17

$HMSP – HM Sampoerna has appointed Mindaugas Trumpaitis as its new President Director to replace Paul Norman Janelle.

Mindaugas comes from Lithuania, and has been working with Phillip Morris for 19 years in Latvia, Finland, Mexico, Switzerland and Canada. The company also plans to spend Rp1tn (US$74.58m) capex in 2017, which will be used to upgrade its machinery next year. 

Nov 21,2016 11:44:18

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).


Nov 16,2016 09:19:12

JCI index closed lower on Tuesday final trading session, decreased by 0.73% to 5,079 with $HMSP, $ADRO, and $UNTR consecutively became lagging movers. The value of transaction was Rp7.3 tn which involved Rp552 bn foreign net sell. Meanwhile, Rupiah closed at 13,369 per USD or strengthened by 8 points. Regional administrations may face challenges in implementing an upcoming rule to boost infrastructure spending in their regions, owing to low capacity and weak spending quality. From our technical desk, we predict JCI could close at positive teritorry with technical range of 5,040,-5,170.

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 08:50:23
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 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 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 12:13:21
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 15:44:46
HM Sampoerna – 1Q16 volume by Robert Pranata
Phillip Morris International just published their 1Q16 results, with volume numbers for HM Sampoerna. Please see comments from Robert Pranata below:  
- HMSP sold 25.1bn sticks in 1Q16, -9% YoY and -10% QoQ. PMI attributed the drop to a soft economy, impact of price increases, as well as high base impact of 1Q15.

- HMSP’s 1Q16 volume reached 22% of 16CL. This is slightly below our expectation, but 1Q is usually seasonally weaker compared to 4Q. 1Q14 volume was 23% of FY14, but 1Q15 was 25% of FY15 volume.

- It is likely that overall industry volume softness is due to the delayed great harvest this year. As El-Nino happened in 4Q15 last year, planting season for many produce shifted from normally Oct-Nov to Dec-Jan. As a result, the harvest is also delayed from March to April-May.

- The main surprise was because indicative data from external market surveys has indicated that there was still slight volume growth in Jan and Feb.

- All of HMSP’s product categories posted volume decline, but U Mild posted the worst performance. This is likely because we have underestimated the impact of competition from Djarum and Bentoel, where they launched products between mild and full flavor.

- HMSP’s 9% YoY volume decline contributes 55% of the overall industry volume decline in 1Q16. This implies that other players volume only dropped by 2.8% in the same period. As such, we estimate that GGRM’s volume may drop around the 3% range.  

- HMSP is expected to publish its 1Q16 result on Apr 26th, whereas GGRM is expected to publish theirs on April 29th. While volume is on the weaker side, earnings are much more sensitive towards price. Hence we do not expect earnings to drop as much as volume.

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.


Mar 04,2016 09:16:54
HM. Sampoerna ($HMSP): FY15 results – Inline

- 4Q15 was as expected. No surprises from HMSP with FY15 revenue reached Rp89tn (10%yoy) and net profit Rp10.4tn (2%yoy). Volume did pick up in 4Q15 with 28bn sticks compared to 26.5bn sticks in 3Q15. Further, we believe the company also raised price ahead of effective excise tax hike in 2016 which then resulted in higher gross margin in 4Q15. However, the company did spend more on ads with ratio of 4.6% to sales in 4Q15 compared to 2.9% in 3Q15. Thus, we saw dip in operating margin from 16.9% to 15.4%.

- Outlook FY16. We believe HMSP will continue to battle the declining SKT segment by emphasizing on its SKM segment particularly for A Mild and Magnum brands. In addition, applicable excise tax hike FY16 for HMSP is around 15% and based on our retail channel check from Jan16, it has increased price by 3.1%. We are currently reviewing our forecast and call for HMSP.
Jul 06,2015 15:42:42
Philip Morris seeks $1B from Indonesia stake sale

Philip Morris (NYSE:PM) plans to sell over $1B worth of shares in its Indonesian operation, PT HM Sampoerna, in what would be one of the year's biggest share sales in Southeast Asia, WSJ reports.

The sale would allow the firm to comply with a pending stock-exchange rule requiring all Indonesia-listed companies to have a minimum free float of 7.5%.

Jun 15,2015 12:28:07
Kalau turun ke deket 65,000 BOW
May 31,2015 12:41:24
Indonesia Top 10 companies by market cap


May 26,2015 14:17:26
Tunggu HMSP untuk pull back ke 60,000 - 65,000 untuk BELI (Investasi jangka panjang)
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.
4,000.00 20.00 (0.50%)
H.M. Sampoerna Tbk.
Last Update 02:54:11