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P H
Oct 13,2017 12:08:28

Halal – An Earnings Boost Strategy

Over the next two decades, the global Muslim population is expected to rise to almost twice of that of the non-Muslim population. Such growth would trigger the vast development of the halal market. We found that companies, which implement halal practices as part of their strategy, are delivering robust earnings growth with high respective ROAEs, asset turnover, and EBIT margins. Our Top Picks are Bangkok Dusit Medical, BIMB, Mengniu, Indofood CBP, and Malee.

  • Robust Muslim population growth boost halal market. According to Pew Research Centre’s Forum on Religion & Public Life (Pew Study), the global Muslim population is expected to rise to about twice of that of the non Muslim population over the next two decades. We see this demographic growth triggering the vast development of halal products. Based on the International Monetary Fund (IMF), the average projected growth of the Organisation of Islamic Cooperation’s (OIC) GDP between 2015-2021 is expected at 4.2% pa, faster than the rest of the world’s GDP growth’s 3.6% pa.
     
  • Huge market with tremendous potential. According to the State Of The Global Islamic Economy Report 2016/17 developed and produced by Thomson Reuters, global Muslims spent over USD1.9trn across industries in 2015. This figure is estimated to grow to USD3trn in 2021 (7.9% CAGR). The largest halal products consumption is halal food, which accounted for 62% of the halal market in 2015. Globally, the Muslim population spent a total of USD1.2trn on food & beverage (F&B), while halal-certified F&B products sales were estimated at merely USD415bn as at 2015. This means that there is an ample room for halal certified F&B products to grow, at least to be equal with global Muslim spending figures. Furthermore, Thomson Reuters estimates Muslim spending on F&B to reach USD1.9trn by 2021, a CAGR of 9% from 2015.
     
  • Delivered robust earnings. Our Halal Thematic report consists of companies in the RHB regional universe – included in the respective countries’ securities’ shariah compliant list or Dow Jones Islamic Index – that implement halal practices on some of their products or services. Having the halal certificate is part of these companies’ respective strategies to boost revenue and expand market base. In our universe, we found 13 companies implementing the halal standards, sectors which include banking & finance, F&B, personal care products, hospital, and logistics. In FY18F, these companies are estimated to deliver robust earnings with c.17.4% ROAE and c.25% YoY earnings growth, in average. In terms of productivity, asset turnover is estimated to average at 1.12x with a 13% EBIT margin.
     
  • Top Picks. Our Top Picks are Bangkok Dusit Medical, BIMB, China Mengniu Dairy (Mengniu), Indofood CBP (Indofood), and Malee. Among the companies in our Halal Thematic coverage, Malee offers the highest ROAE and asset turnover, while Matahari Department Stores (Matahari) provides the highest EBIT margin. (Andrey Wijaya)

$ICBP $INDF

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P H
Sep 12,2017 17:57:25

Our ground checks suggest the retail selling price for instant noodles remained stable, while the selling price for dairy increased, probably as a result of a higher skimmed milk price. While the cost of flour remains manageable, which is positive for instant noodles, we see increased competition in the RTD-tea, indicated by its lower selling price YTD. A main challenge on input costs is the potentially higher refined sugar price after the implementation of a new regulation by the Ministry of Trade. The impact of the new policy is still unclear thus we maintain our forecasts and BUY recommendation on Indofood with an IDR10,300 TP (18% upside) which implies 21x FY18F P/E.


  • Retail selling prices for instant noodles were relatively flat. Our ground checks during August suggest that the retail selling prices for Indofood’s instant noodles Indomie Kari Ayam and Goreng Special were relatively flat MoM. For premium instant noodles, the sales volume of Indomie Real Meat is likely to increase, as its retail selling price is below that of its competitors. On the cost side, over the past two months the international wheat price was in a declining trend. As there is a timelag between the international selling price of wheat to that of the domestic flour (the main raw material of noodles) the input costs of instant noodles should remain manageable over the next two-three months. Noodles accounted for c.62% of Indofood’s total sales in 1H17 (Figure 1).
  • Due to higher raw material costs, a higher retail selling price for dairy. Indofood’s dairy price for Indomilk in small pack (190ml) began to increase in August following Indomilk’s price increase for its large pack (1ltr). In our view, this is likely due to a higher cost of its raw material (ie skimmed milk). Dairy products accounted for c.19% of Indofood’s total sales in 1H17 (Figure 1).
  • Our ground checks suggest that competition in the ready to drink (RTD) tea market remains intense which is indicated by a declining retail selling price of the major RTD-tea brands which include Indofood’s Ichi Ocha, Sinar Sosro’s Teh Sosro, ABC President’s Nu Tea and Coca Cola’s Frestea.
  • New policy impacting the refined sugar. Following the implementation by the Government of a new Trade Regulation (No. 16/2017) the main challenge going forward on RTD-teas and dairy products is the potentially higher cost of refined sugar. However, the impact is still unclear. The Vice Chairman of Indonesian Farmers Concern Association (HKTI) said this policy may increase the cost of refined sugar by c.2%. The Association of Soft Drinks Industry estimates the price of refined sugar may increase instead by 15%-30%.
  • Maintain BUY with an IDR10,300 TP (18% upside) which implies a 21x FY18F reported P/E. We maintain our forecast on Indofood for now as the impact of the new policy is still unclear. The main risk to our call is the magnitude of the increase in the cost of refined sugar which may result in added pressure on the earnings of dairy and beverage products. Beverages accounted for c.5% of Indofood’s total sales in 1H17 (Figure 1). (Andrey Wijaya)


$ICBP $INDF

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P H
Jun 13,2017 18:18:49

Our recent conversation with management of Indofood Sukses Makmur ($INDF) revealed more details on the recent Pluit land transaction:

  • Indofood revealed that Mr. Salim had previously received an offer from an independent third party to acquire the land for commercial development, priced at premium price. Hence, the company believes that the land price on the transaction (IDR51m per sqm) should be fair and reasonable. The transaction price is in line with independent valuator assessment.
  • Mr. Salim have opted to sell the land to AIM (Indofood subsidiary) as, in doing so, Salim Ivomas would be able to continue running its cooking oil production facility there. Then, Salim Ivomas will pay land rental fee to AIM which fee determined on arm-length basis. AIM will finance the acquisition via equity injection and debts.
  • AIM is owned by Indofood Sukses Makmur, Indofood CBP ($ICBP), London Sumatra ($LSIP) and Indofood Sukses Makmur ($INDF). The company is consolidated on Indofood Sukses Makmur’s balance sheet. INDF just increased its ownership on AIM, partly to finance the land acquisition.
  • Indofood does not have plan to convert the Pluit land into commercial areas, so far. According to the management, based on Jakarta’s local government permit, the Pluit land can still be used for manufacturing activities until around 2020. According to Jakarta’s zoning and spatial maps, which are issued by the local government, the purchased lands are in the K1 zone – where space is designated for office, commercial and service buildings. Mixed-use buildings can also be built on K1- zone land, with land spanning 20,000 sqm at minimum.
  • Since the announcement of this inter-companies transaction, INDF share price down 5%, which we believe mainly pressured on investor’s concern on how fair the price of the land may be.

  • We maintain BUY on Indofood Sukses Makmur, with a DCF-based IDR10,300 TP (22% upside) that also implies 19x/17x FY17F-18F P/Es respectively. (Andrey Wijaya)




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P H
Apr 11,2017 15:09:36

Post-China Minzhong divestment, Indofood’s balance sheet became healthier with lower debt. Net gearing declined to 0.2x as at end-Dec 2016 (from 0.5x end-Sep 2016). Our ground checks suggest Indofood’s flour and CBP retail selling prices increased in Dec 2016 and January. These higher ASPs are likely the result of the pass on costs from the increase costs especially cost of goods sold (COGS) in 4Q16. We maintain our BUY recommendation with a DCF-based IDR10,300 TP (28% upside), implying 19x and 16x FY17F-18F P/Es respectively.

  • Healthier balance sheet. Indofood Sukses Makmur’s ($INDF) balance sheet is healthier after the China Minzhong divestment, which was completed at end 2016. Proceeds from the divestment were used to pay its debt, which saw a decline to IDR22trn (-30% QoQ) at end-Dec 2016 (from IDR32trn at end-Sep 2016). Net debt-to-equity ratio declined to 0.2x (from 0.5x) with its foreign currency debt exposure declining to 37% (from 50%) in the same period. Going forward, we also expect financing costs to decline.
      
  • Raised ASPs. Our ground checks indicate that the retail selling price of Indofood’s flour Cakra Kembar and Segitiga Biru rose by around 10% and 5% MoM, respectively in Dec 2016. Furthermore, in January the retail selling prices of its subsidiary, Indofood CBP ($ICBP)’s products such as instant noodle and RTD-tea also increased. These higher ASPs are likely to improve EBIT margin. Notably, Indofood’s flour and consumer branded products’ (CBP) 4Q16 EBIT margin narrowed, driven by higher costs. Maintan BUY with IDR10,300 TP, implying 19x/16x FY17F-18F P/Es respectively.
      
  • 4Q16 earnings in line. Indofood’s 4Q16 earning came in at IDR905bn (- 10.4% QoQ), in line with expectations. EBIT margin widened to 13.9% in 4Q16 (from 12.2% in 3Q16) thanks to its improved agribusiness earnings. However, it was offset by lower financing income and lower income from associates. (Andrey Wijaya)
      
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P H
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.   

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P H
Dec 14,2016 07:54:08

Mayora Indah: 3Q16 Beats Expectation ($MYOR; Rp 1,595; Neutral; TP: Rp 1,550)

  • MYOR posted impressive growths despite declining margins, helped by decent sales growth and a surprise drop in ads and promotion spending to a 5-year low. The former is encouraging, but the latter is actually not.
     
  • Core profit beats forecast. A swing from Rp260bn FX gain in 9M15 to Rp185bn loss in 9M16 slashed net profit growth to 3% YoY in 9M16. Stripping this out, core profit jumped 53% YoY to Rp1,037bn, beating our forecast with 73% realization (vs. 2-year average of 66%). Two key drivers are: 1) Impressive 28% YoY revenue growth in 3Q16, bringing 9M16 growth to 25% YoY (versus management’s 18% revenue growth guidance for 2016); and 2) significant 55%/59% YoY/QoQ drop in 3Q16 ads spend, which is as a big surprise.
     
  • Revenue growth offsets weaker gross margin. Domestic sales (+35% YoY in 9M16) continued to drive growth, albeit from a low base (-15% YoY in 9M15). Weaker export sales growth is expected, partly due to stronger IDR, but the rebound in exports growth to 18% YoY in 3Q16 from -1% in 2Q16 helped overall momentum. That said, this manages to offset the negative impact from falling coffee (-2.4ppt QoQ) and confectioneries (-0.6ppt QoQ) in light of higher coffee and sugar prices, which have been reflected in the increase in raw material inventories of late.
     
  • Alarming drop in A&P spending. We see the 59% QoQ drop in ads & promotion (A&P) spending as alarming for a fastgrowing consumer company. It implies a 5-year low A&P-to-sales ratio at 4.7%, much lower than the 10.5% ratio in 1H16. As a comparison, the A&P spending growth for UNVR/ICBP was 0%/34% YoY. We have yet to clarify with the management on this.
     
  • 4Q16 should be showering with gifts. Sales are seasonally strong in Q4, especially for exports: IDR today has weakened by 119bps QoQ, and exports are half of sales.
     
  • Neutral call unchanged, waiting for more clarity. We maintain our Neutral call and Rp1,550 price target. Our DCF based price target implies 24x 2017F PE. We may review our numbers as we seek further clarification from the management.
     

$MYOR $ICBP $UNVR

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P H
Dec 05,2016 14:49:46

Industri makanan dan minuman nasional +9,82% setara dengan Rp192,69 triliun pada kuartal III 2016. Kenaikan disebabkan oleh masih tingginya permintaan masyarakat kelas menengah ke atas untuk produk-produk tersebut. Demikian dikatakan oleh Direktur Jenderal Industri Agro Kementerian Perindustrian, Panggah Susanto.

$ICBP $AISA

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P H
Dec 02,2016 13:21:30

ICBP: Continue to Innovate
 
ICBP membukukan pertumbuhan pendapatan +9,9% YoY menjadi Rp 26,47 triliun atau menurun -10,3% QoQ. Laba bersih pun meningkat menjadi +15,9% YoY menjadi Rp2,83 triliun atau menurun -17,6% QoQ. Kami tetap memiliki pandangan positif untuk ICBP mengingat variasi produk yang terus dikembangkan. Sebagai kesimpulan kami merekomendasikan BELI untuk ICBP dengan target harga Rp11.500/saham, mengimplikasikan pertumbuhan EPS sebesar 18% pada FY17 dengan PE 28,8x FY7F.
 

$ICBP $INDF

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P H
Nov 23,2016 22:49:34

Chart of the day: Tapping into Indonesia ice cream market

Indonesia ice cream market size (USD100m as of 2015) will likely to accelerate faster which is driven by more competition and low ice cream consumption. According to Euromonitor data, ice cream market size is estimated to grow c9% Cagr during 2015-2020, second highest after India. $ICBP has a total of 59 SKU for ice cream with additional 7 new SKU under “Nusantara” flavor which are competing directly with its competitors – $UNVR and Wings.

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P H
Nov 23,2016 08:48:45

Did you know?  That ICBP’s Indomie instant noodle has more than 40 different flavors? Since inception in Sept 1970, Indomie has been the leading instant noodle in Indonesia and around the world.
 
Offering different flavor such as Fried Noodle, Soto Mie, Tom Yum, Bulgogi, and Real Meat, Indomie is now available in more than 100 countries. Also worth noting that in present day, Indonesia is the second largest instant noodle consumer in the world at 14.5bn packs/year, after China which consumes 44bn packs/year.

Indofood ($INDF) through its subsidiary Indofood CBP ($ICBP) has been innovative with its products to appeal to “demanding” customers both domestically and overseas.  As such, we can see a wide range of products from the company now available for our choosing.

New product launch is a key strategy for all consumer companies to grab market share.  Reason why we see consumer staple companies such as Unilever ($UNVR) and Wings also aggressively launching new line of products.

Today consumer analyst Merlissa Trisno points out that INDF will keep its pace in product launch to grab market share.  INDF will see stronger revenue growth potential for its CBP division at 12.3% in 17CL driven by its new products launching particularly in the dairy and beverage divisions.

However, due to potentially weaker Rupiah assumption and higher soft commodity prices (ie. CPO, sugar, skimmed milk), we estimate 50bps lower Ebit margin for 17CL.
 
Thus, Merlissa expects lower earnings growth potential for 17CL at high single-digit level of 8.1% as compared to 25.6% in 16CL.

While higher CPO price results in higher cost for CBP, INDF the parent company is a net beneficiary given its upstream plantation exposure (15-20% of Ebit).  4Q16 CPO price has exceeded RM2,800/t (+5% qoq) and close to RM3,000/t in the week of November 11.
 
This spells upside for our current regional CPO price forecast of RM2,450/t and RM2,600/t in 16-17CL respectively.  Our sensitivity analysis suggests that for every 10% CPO price increase it translates to 6-8% EPS upside at INDF level, all else equal.

Merlissa’s thesis on CPO is supported by CLSA’s plantation analyst, Chuanyao Lu (CY), who in his latest report emphasized the persistent low inventory level in Malaysia and China due to El-Nino aftermath.  CPO inventories in Malaysia stood at 1.57mt which is virtually unchanged from Sep and is 45% lower compared to 2015.

As such, CY expects CPO prices to continue its uptrend.  And with production recovery on the horizon, we expect this to translate into better earnings for the industry.

Circling back to INDF, Merlissa highlights that INDF claims that the SGD416m proceed from 52.9% China Minzhong (SG:K2N) divestment will likely be received around December 2016, subject to the delisting and privatization process in SGX.  Merlissa has incorporated ~Rp370bn divestment loss in her 2016 financial forecast.
 
Post the transaction, net gearing will drop to 17% in 2016-17CL, from 33% in 2015.  We estimate interest cost saving of around Rp100bn but with lower earnings contribution from Minzhong which might lead to a net net Rp60-70bn cut in 2017 earnings.

In summary, Merlissa adjusts INDF’s EPS down by 6% for 17CL and 4.1% for 18CL to factor in a lower EPS assumption for the CBP division and lower Minzhong ownership (from 82.9% to 29.9%).
 
Despite lower earnings assumptions, Merlissa maintains her BUY recommendation and target price at Rp10,500/sh for INDF as she rolls forward her SOTP-based valuation to end-2017.  The target price implies a 20x 17CL PE.

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P H
Nov 23,2016 08:44:47

Did you know?  That ICBP’s Indomie instant noodle has more than 40 different flavors? Since inception in Sept 1970, Indomie has been the leading instant noodle in Indonesia and around the world.
 
Offering different flavor such as Fried Noodle, Soto Mie, Tom Yum, Bulgogi, and Real Meat, Indomie is now available in more than 100 countries. Also worth noting that in present day, Indonesia is the second largest instant noodle consumer in the world at 14.5bn packs/year, after China which consumes 44bn packs/year.

Indofood ($INDF) through its subsidiary Indofood CBP ($ICBP) has been innovative with its products to appeal to “demanding” customers both domestically and overseas.  As such, we can see a wide range of products from the company now available for our choosing.

New product launch is a key strategy for all consumer companies to grab market share.  Reason why we see consumer staple companies such as Unilever ($UNVR) and Wings also aggressively launching new line of products.

Today consumer analyst Merlissa Trisno points out that INDF will keep its pace in product launch to grab market share.  INDF will see stronger revenue growth potential for its CBP division at 12.3% in 17CL driven by its new products launching particularly in the dairy and beverage divisions.

However, due to potentially weaker Rupiah assumption and higher soft commodity prices (ie. CPO, sugar, skimmed milk), we estimate 50bps lower Ebit margin for 17CL.
 
Thus, Merlissa expects lower earnings growth potential for 17CL at high single-digit level of 8.1% as compared to 25.6% in 16CL.

While higher CPO price results in higher cost for CBP, INDF the parent company is a net beneficiary given its upstream plantation exposure (15-20% of Ebit).  4Q16 CPO price has exceeded RM2,800/t (+5% qoq) and close to RM3,000/t in the week of November 11.
 
This spells upside for our current regional CPO price forecast of RM2,450/t and RM2,600/t in 16-17CL respectively.  Our sensitivity analysis suggests that for every 10% CPO price increase it translates to 6-8% EPS upside at INDF level, all else equal.

Merlissa’s thesis on CPO is supported by CLSA’s plantation analyst, Chuanyao Lu (CY), who in his latest report emphasized the persistent low inventory level in Malaysia and China due to El-Nino aftermath.  CPO inventories in Malaysia stood at 1.57mt which is virtually unchanged from Sep and is 45% lower compared to 2015.

As such, CY expects CPO prices to continue its uptrend.  And with production recovery on the horizon, we expect this to translate into better earnings for the industry.

Circling back to INDF, Merlissa highlights that INDF claims that the S$416m proceed from 52.9% China Minzhong (SG:K2N) divestment will likely be received around December 2016, subject to the delisting and privatization process in SGX.  Merlissa has incorporated ~Rp370bn divestment loss in her 2016 financial forecast.
 
Post the transaction, net gearing will drop to 17% in 2016-17CL, from 33% in 2015.  We estimate interest cost saving of around Rp100bn but with lower earnings contribution from Minzhong which might lead to a net net Rp60-70bn cut in 2017 earnings.

In summary, Merlissa adjusts INDF’s EPS down by 6% for 17CL and 4.1% for 18CL to factor in a lower EPS assumption for the CBP division and lower Minzhong ownership (from 82.9% to 29.9%).
 
Despite lower earnings assumptions, Merlissa maintains her BUY recommendation and target price at Rp10,500/sh for INDF as she rolls forward her SOTP-based valuation to end-2017.  The target price implies a 20x 17CL PE.

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P H
Nov 22,2016 12:53:11

Unilever: What’s the Scoop? ($UNVR; Rp40,000; neutral; TP:Rp41,900)

  • Glico Wings ice creams have hit selected markets with 16 variants retailed at Rp1,000-12,000. We followed up our previous report with a profile and price comparison to UNVR's ice creams and did preliminary analysis on the potential revenue impact.

  • Similar ice creams across the families. We observed that Glico Wings introduced 16 brands grouped under 4 families: Waku-Waku; Frost Bite; Jcone; and Haku. According to our channel check, they are available only in selected GTs in Java and Sumatera, targeting MTs and big cities in early Dec’16. Despite some flavor differences, we notice many of Glico Wings ice creams are priced and sized similarly to Wall’s (by UNVR) key brands, while some look comparable (Figure 10 and 11). At this moment, however, Glico Wings has fewer SKUs compared to Unilever. We also included Campina to the list, which has higher prices overall; while in terms of sizes and looks, many are not comparable.

  • What’s different? We see that Glico Wings is aggressive in the low-end market with Strawberry/Choco Loop that retails at Rp1,000/35ml, while UNVR does not circulate products within this range. UNVR’s smallest-sized key brand is Cornetto Mini at Rp2,500/28ml, but it is sold per box (12 pieces), not per piece. However, Glico Wings does not have local flavor ice creams (i.e. UNVR’s Dung-Dung); this should give UNVR some space while welcoming Indoeskrim’s Nusantara (by $ICBP).

  • How would the initial reaction play out? We have not tasted the products, but learned that the marketing strategy was quite successful in Thailand as Glico’s first international market. Thailand’s launching was early this year, where consumers went on a hunt across minimarts as they were sold out instantly. Similarly, there have been positive reactions toward Glico Wings ice creams in Cikarang, where freezers in GTs emptied out within 1 day due to excitement, based on our channel checks.

  • Preliminary analysis. UNVR’s market share in the ice cream market was 68% in 2015, accounting for c.15% of sales. When the JV was established, Glico Wings initially aimed for 10% share in 5 years. Should this entire 10% be stolen from UNVR’s, its revenues could decline by ca.2%. While Glico’s pricing appears to be similar to Wall’s, we think the competition may still lead to more aggressive ad spend and trade promotion. We are still Neutral-rated given the rising sales mix from the higher-margin HPC.

$UNVR$ICBP

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P H
Nov 22,2016 10:50:17

Ultrajaya Milk Industry ($ULTJ): Key Beneficiary Of Growing Milk Consumption

We see a promising outlook for Ultrajaya – Indonesia’s largest ultra-high temperature (UHT) milk producer. Indonesia’s current milk consumption is low compared to its neighbouring countries. Ultrajaya is expected to reduce its dependency on imported raw materials by developing its own farms. Currently trading at an attractive 18x FY17F P/E (based on consensus estimates), its valuation is lower than peer average of 23x FY17F P/E. Key risks include forex and international raw materials price volatility.

¨ A very promising market. At 14kg per capita, Indonesia’s national milk consumption is significantly lower than neighbouring countries such as Thailand (34kg per capita) and Malaysia (54kg per capita). Ultrajaya Milk Industry & Trading Co (Ultrajaya) expects sales volume of milk to grow 10-15% pa in the long run driven by higher disposable income in Indonesia. Liquid milk is expected to grow at a faster pace compared to condensed and powder milk. As the market leader in liquid milk production, Ultrajaya expected to be a key beneficiary.

¨ Reducing its dependency on imported raw materials. Currently, more than 50% of its raw materials are imported. To reduce its dependency on imported raw materials, Ultrajaya is building a new dairy farm in North Sumatra and increasing the number of milking cows in its West Java farm. The new dairy farm in Sumatra targets to have 11,500 milking cows in the next five years. For the first phase of expansion, which should begin in 3Q17, the company is expected to start its operations with 2,000 milking cows which would gradually increase, along with the improvements in its logistics and distribution business.

¨ Strong balance sheet to support future expansion plans. Aside from the new dairy farm, Ultrajaya is also building a distribution centre and new manufacturing facility located in MM2100 industrial town, Cikarang, West Java. Its investments in the distribution centre is expected to be c.USD20m and the company is still finalising its plans for the new manufacturing facility. We are of view that Ultrajaya has a strong balance sheet and cash position to support its future expansion plans given that c.35% of its total assets are in the form of cash (c. IDR1.4trn) as of Sep-16.

¨ Competition in tea beverage segment to remain fierce. Indonesia’s ready to drink (RTD) tea market consists of more than 200 stock keeping unit (SKUs). Ultrajaya has only one SKU – Teh Kotak brand – which is the market leader in the RTDtea in cartoon pack with a 75% market share. To deal with competition, Ultrajaya’s strategy is to maintain its selling price and the quality of its product. This differs from its peers who mainly lower selling prices to gain market share.

¨ Attractive valuation. Ultrajaya is currently trading at an undemanding valuation of 18x FY17F P/E, lower than its peer average of 23x FY17F P/E. We like Ultrajaya as a long-term investment given its market leadership in the milk segment, strong balance sheet and extensive distribution network. Key risks include forex and international raw materials price volatility. (Andrey Wijaya)

$ULTJ $ICBP

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P H
Nov 17,2016 13:40:59

Unilever Indonesia: New threat from Glico Wings ice cream ($UNVR)

- Glico Wings ice cream entered the market early this month, starting with Java and Sumatra, then the rest of Indonesia next year. We recall that the JV initially targets ~10% medium-term market share, which could eventually be sizeable for UNVR (68% market share in 2015) that derives ~15% of revenues from ice cream.

- Game on! Glico Wings, the JV between Wings Food and Ezaki Glico, the largest ice cream producer in Japan, started circulating its ice cream products since November 7 in Java and Sumatra, while planning to penetrate the rest of the country next year. Glico Wings’ main products are: 1) ‘Waku Waku’ for kids; 2) ‘J Cone’ for teenagers; 3) ‘Frost Bite’ and ‘Haku’ for adults. The JV operates on a 70,000m2  factory in Karawang; all raw materials are sourced locally except for matcha that is still imported from Japan.

- Glico has been a long time coming. We recall that this JV was established in 2013, but the launches have been delayed from the initial plan of January 2015. It has been Ezaki Glico’s aspire to expand overseas given the saturated domestic market. Wings Glico itself aimed for a ~10% market share in a medium-term, targeting the two biggest players: Unilever with its Wall’s brand (68% market share in 2015) and Campina (18% share).

- How disruptive could it be? The threat to Unilever could eventually be sizeable, given that ice cream contributes about 15% of Unilever’s revenues and has been among the fastest growing products. Glico’s partnership with Wings, a prominent local FMCG company, should add value in the local distribution and marketing. We think the minimarts may also support this new ice cream competition, despite the challenge in the fridge storage size, as it could earn >25% gross margin from ice cream distribution, much higher than the consolidated merchandise gross margin of ~18%. Similarly, $ICBP is also expanding its ice cream business with Indoeskrim.

- Neutral rating; Rp41,900 price target. While we like UNVR’s improving earnings feasibility given the sales mix changes towards the high-margin HPC segment, we think more catalysts are needed to justify its valuation in the midst of rising ice cream competition, among others.

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P H
Nov 04,2016 09:21:10

Menakar kelezatan pertumbuhan bisnis ICBP

PT Indofood CBP Sukses Makmur Tbk membukukan kinerja yang memuaskan pada sembilan bulan pertama tahun ini. Emiten berkode ICBP ini berhasil mencetak pertumbuhan laba 15% menjadi Rp 2,83 triliun.

Analis Panin Sekuritas I Dewa Agung Trisna mengatakan, kinerja ICBP akan tetap tumbuh didorong hadirnya produk-produk baru yang disukai konsumen.

"Kami melihat emiten konsumer itu dari sudut pandang apakah dia bisa menggaet konsumen? Konsumen cenderung suka produk-baru baru. Kami lihat ICBP ini terus berinovasi," kata Agung kepada KONTAN, Kamis (3/11).

Agung menjelaskan, di semester pertama lalu, ICBP meluncurkan produk baru seperti, Chitato rasa Indomie dan Indomie Bite Mie. Produk ini berhasil meningkatkan volume penjualan 16,5%.

ICBP juga merilis produk terbaru yaitu Indomilk rasa pisang dan Chitato Foodie. Adapun di kuartal tiga 2016, ICBP meluncurkan varian baru pada segmen mi instan, yaitu Super Mie Ayam Opor.

Untuk makanan ringan, ICBP menelurkan Chiki rasa rumput laut dan juga varian baru dari merek snack Jetz. ICBP pun merambah segmen kelas menengah atas dengan produk seperti Indomie Real Meat. "Kami yakin marginnya lebih bagus daripada Indomie biasa," ujar Agung.

Analis Daewoo Securities Dang Maulida lewat risetnya, Senin (31/10), mengungkapkan, di sembilan bulan pertama tahun ini, semua segmen usaha ICBP tumbuh. Pendapatan segmen dairy tumbuh 20,63% menjadi Rp 5,23 triliun, karena pertumbuhan dari segi volume dan profitabilitas.

Hal ini didukung oleh harga susu bubuk skim yang lebih rendah tahun ini. Kontribusi segmen ini naik dari 18% tahun lalu menjadi 19,77% dari total pendapatan ICBP.

Menurut Dang, peningkatan kontribusi segmen dairy diikuti dengan penurunan kontribusi segmen mi instan jadi 64,2%. Selama ini mi instan jadi kontributor utama ICBP. Di sembilan bulan pertama 2015, kontribusi segmen mi instan mencapai 65,4%.

"Pergeseran ini bermanfaat bagi ICBP karena mencerminkan kontribusi pendapatan yang lebih seimbang dari tiap segmen dalam jangka menengah atau panjang," kata Dang.

Selain itu, segmen minuman ICBP juga mengalami pertumbuhan volume 3%, meningkat dari pertumbuhan 1% sepanjang paruh pertama tahun ini. Peluncuran produk baru di kuartal tiga, yaitu Cafèla Expresso, mengerek porsi segmen ini.

Untuk tahun ini, Dang memprediksi ICBP bisa membukukan pendapatan Rp 36,2 triliun, naik 13,9% ketimbang tahun lalu. Laba bersih ICBP diperkirakan bisa tumbuh 25,4% ke Rp 3,76 triliun.

Untuk tahun depan, Dang menganalisa ICBP bisa meraup pendapatan Rp 39,9 triliun dan laba bersih Rp 4,3 triliun. Dia merekomendasikan buy ICBP dengan target harga Rp 11.800 per saham.

Analis UOB Kay Hian Stevanus Juanda dalam risetnya, Senin (31/10), menaikkan proyeksi pendapatan ICBP pada 2016 dan 2017 masing-masing 2,8% dan 4,7%. "Kami perkiraan EBIT margin sedikit lebih agresif dibandingkan dengan guidance ICBP," ujarnya.

Stevanus merekomendasikan hold ICBP dengan target harga Rp 9.250 per saham. Harga saham ICBP telah merefleksikan beberapa berita baik.

Sementara itu, dengan adanya inovasi produk, Agung merekomendasikan buy ICBP dengan target harga Rp 11.500 per saham, meski PE-nya mahal.

"Konsumer memang mahal karena defensif, tapi kami juga lihat dari strategi perusahaan, bukan sekadar PE. Tahun depan, PE-nya bisa naik sekitar 30-an karena rata-rata PE saham konsumer memang 30-an," ujar Agung.

$ICBP $INDF

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P H
Sep 21,2016 12:53:05

ICBP: PT Indofood CBP Sukses Makmur Tbk mampu membuktikan diri sebagai perusahaan yang mature dengan tetap merekam pertumbuhan kinerja walaupun perekonomian nasional sempat melambat beberapa waktu lalu. Pada semester I/2016, pertumbuhan volume divisi susu ICBP melonjak 21% secara tahunan di semua merek.

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P H
Aug 29,2016 22:08:56
Indonesia Equities: Pricing In Near Term Positives

Key Points

- +9% gains in MSCI Indonesia since our country upgrade in July - Since our upgrade of Indonesian equities to overweight two months ago in the MIG publication after clarity on its tax amnesty programme emerged, sentiment has further improved following the appointment of well respected Finance Minister Sri Mulyani Indrawati. The Indonesian equity market has seen strong equity inflows in 3Q16 lifting the index up ~9% (local currency terms, +8.2% in USD), which has outpaced world equities’ gains (+5.2%) for the same period and supported our call.

- Year to date’s gains of +18.6% has also more than recouped 2015’s losses of -12%, which has supported the turnaround highlighted in our January 2016’s South East Asia Equity Strategy report. The equity market rally year to date has been supported by a benign environment of lower interest rates, stable IDR currency vs the USD, under-owned positions in global portfolios and improving confidence in Indonesia’s recovery story. Estimated equity inflows into Indonesia so far for 3Q has exceeded the total inflows for 1H16, driving the market to new highs. Since mid May this year, it is estimated that net equity inflows reached $1.7bln, vs $1.6bln net outflows over the whole of 2015 (source: JPM estimates).


- Near term positives post amnesty and cabinet reshuffle look priced in, valuations are now close to 10 year high – At 16x PER, Indonesian equities is now trading close to +2 standard deviations to its 10 year historical average multiple and at its highest valuation level since 2007, which we believe has priced in much of the near term positives. Although near term liquidity is likely to remain supportive given benign expectations on interest rates, we caution that valuations have caught up and believe it is prudent to start taking some money off the table. On domestic updates, while the recently released 2017 budget is credible, it is unlikely to lead to further corporate earnings upgrades given a moderate government spending target of 6% (planned fiscal deficit for 2017 is 2.4% of GDP, flat/lower than 2016E). Towards the end of September and December which marks the first and second phases of the tax amnesty programme’s staggered tax rates for declared wealth, investor sentiment may also be influenced by expectations over the tax collections.


- Muted start to the 9-month tax amnesty programme, although still early days - As of 23rd August 2016, the asset declaration in the Tax Amnesty Program has reached Rp51.7tn, consisting of 85% onshore/15% offshore assets (12% overseas assets declared, 3% overseas net assets repatriated), while asset repatriation has reached Rp1.6 tn. Momentum of onshore assets declared in first half of August has picked up, with the tax office reporting about Rp11.5tn worth of onshore assets declared (>4x July’s). About three-quarters of the assets declared were from private individuals, and the balance private entities, which we view as supportive of property sector’s recovery given interest rates are expected to remain low while the Ministry of Finance has allowed repatriated funds to be invested in real assets (such as property and gold).


- Looking ahead, earnings upgrades need to pick up momentum for the rally to have more legs - Earnings wise, the recent 2Q results season was mixed with single digit corporate top line growth from a year ago. Concerns on banks remain dragged by asset quality issues while commodity related earnings have been moderate. Following the latest 2Q earnings season (where consensus earnings were trimmed -2% lower for FY16E and FY17E), FY16E and FY17E earnings are now forecast to grow +7% and +14% respectively (higher than Asia ex Japan equities’ 2.2% FY16E and 11% for FY17E respectively) which we believe is priced in current valuations.

Time to lock in some profits – Switch out of names which have rallied and offer no upside to target prices
- Sectors we are cautious on are: Commodity related plays which have rallied and priced in recovery expectations (coal – Bukit Asam, ITMG, palm oil – Astra Agro, London Sumatra), Banks (loans growth will be moderate while we expect asset quality concerns to remain a near term overhang) and Utilities (in particular, Perusahaan Gas – where we think profitability will remain pressured by regulatory efforts to lower gas prices).

Preferred Picks/Switch Ideas

- Preferred Sectors we would accumulate new positions are: Property (Bumi Serpong – Western Jakarta play, large landbank catering to middle income buyers), Telecommunications (Telekomunikasi Indonesia – improving smartphone penetration and data usage supported by a young population), Consumer (Indofood and Media Nusantara, which benefit from an improving domestic economy in 2H16) and Infrastructure (Jasa Marga – No. 1 toll road operator, long term beneficiary of infrastructure development in Indonesia).


- Risks to the current rally include weaker than expected global economy, faster than expected Federal Reserve interest rate hikes which may result in global liquidity volatility and disappointments in the domestic recovery and infrastructure spending pace (continues to be a focus in the 2017 budget, with 9% yoy expected growth).


$PTBA $KKGI $HRUM $ITMG $AALI $LSIP $SGRO $SMAR $PGAS $BBCA $BBRI $BMRI $BBNI $BSDE $ASRI $LPCK $LPKR $CTRA $TLKM $INDF $ICBP $AISA $MNCN $JSMR

Bull
P H
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)

AUGUST 2016
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)

SEPTEMBER

Sep 13, 2016
$SMCB (Holcim Indonesia)

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P H
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
spending.”
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.
hide
P H
Jun 04,2016 18:32:38
Indofood CBP (ICBP) - Outlook Still Promising Despite Weak 4Q15
 
We maintain a BUY call and raise our TP to IDR16,800 (from IDR16,300, 11% upside), as we change our valuation to DCF from P/E multiple. We see a promising earnings outlook for Indofood, on the back of lower flour costs, which should boost its noodles segment’s earnings. Flour prices are estimated to decline further, after falling by 2-3% YTD.

¨ Likely to benefit from lower input cost. We see that Indofood CBP’s (Indofood) noodles segment – which accounted for c.90% of consolidated earnings – should benefit from lower flour costs, which is its main input cost. YTD March, flour prices have declined 2-3% thanks to lower commodity wheat prices and a stabilised IDR. Going forward, we believe flour prices should decline further on the back of a downtrend in wheat prices and the entry of new players, who commonly set their prices lower than those of existing players. This could lead to price competition and ultimately benefit flour consumers such as Indofood, which produces noodles.

¨ Maintain BUY with a higher TP. We raise our TP to IDR16,800 (from IDR16,300), as we change our valuation method to DCF from P/E multiple. Our revised TP is based on 9.7% WACC and 2% TG, implying 26x/24x FY16F-17F P/Es. The key risk to our call is higher flour prices.

¨ 4Q15 earnings: below expectations
 
¨ 4Q15 earnings miss our and consensus estimates, declining to IDR706bn (-21% QoQ). Sales were flat, driven by lower noodles segment earnings, which were hit by higher flour costs. The noodles segment’s EBIT margin narrowed to 12.4% in 4Q15 (vs 17.4% in 3Q15), despite a higher ASP. Based on our checks with Indofood Sukses Makmur (Indofood Sukses) (INDF IJ, BUY, TP: IDR7,150), flour ASP increased 3% QoQ during the period.

$ICBP $INDF

Bull
P H
May 16,2016 23:03:36
Indofood
1Q growth was strong (ICBP EBIT 32% y/y growth), sustainability is questionable but at least will be better than last year;
Wage increase (10-12%) tops inflation (5%); Jan to Mar saw an uptrend, No numbers released for April.
Sales contribution:66% noodles, 19% dairy, 6% snacks, 2% food seasonings, and rest are nutrition & special foods and beverages.
Noodles:
-         Sustainable margin 13-15% even - in the long run
-         Indofood has strong penetration. Growth probably 1-3% in the next 5 years. Price will mirror inflation
-         Top line will see high single digits growth
-         Two players market: INDF (75%) and Wings (25%)
-         95% domestic sales
-         Competition: Not worried with Mie mewah as users are very loyal to instant noodle brands
Dairy (stellar 32% y/y vol growth in 1Q, with margin expanding by 10% to 18.5%):
-         Expanded in weaker areas esp for milk and condensed milk
-         Targeted  marketing approach last year
-         Margin strength supported by drop in global milk prices
-         But milk price is very volatile
-         Sustainable margin 7-9%
Snacks:
-         Last year saw customers down trading to cheaper products
-         Trend reversing back this year
Beverages:   
-         Guided for 30% growth this year, but only flat in 1Q
-         Will revise this down, and increase on dairy
Seasonings: Margin squeezed on higher packaging cost and higher ingredients
Agri: Guiding for flat production this year at max, from -5% y/y earlier. Price expectations? Price taker and they don't hedge
Bogasari: Flour is growing 9% in 1Q; 70% of sales are going into ICBP, rest into industrial players; Inline with industry growth
Downside risks:
-         Mixed signals
-         They can probably achieve guidance of low double digits growth
INDF breakdown:
-         Sales : 52% CBP; 24% Bogasari; 16% Agri; 8% Distribution
-         EBIT: 63% CBP; 24% Bogasari; 11% Agri; 1.6% Dist
-         Marketing expenses as % of sales have been increasing: ICBP is 4.2% of net sales, budget is 5%; Lower than peers

$INDF $ICBP $SIMP $LSIP

Bull
P H
May 11,2016 18:35:57
Katalis Positif Indofood CBP
Investor Daily memberitakan PT Indofood CBP Sukses Makmur Tbk (ICBP) membukukan kinerja keuangan kuartal I-2016 yang masih bagus dan sejalan dengan estimasi. Perseroan mencatatkan penjualan senilai Rp 8,9 triliun atau tumbuh 12% dibandingkan periode sama tahun lalu. Laba bersih tercatat Rp 944,8 miliar atau tumbuh 18,6%.

Analis KDB Daewoo Securities Indonesia Dang Maulida menilai, pertumbuhan kinerja Indofood CBP tersebut secara keseluruhan didukung oleh pemerintah yang telah menelurkan paket-paket kebijakan ekonomi dan penurunan suku bunga acuan (BI rate). “Pemerintah menurunkan harga BBM yang mendorong daya beli konsumen, sehingga menguntungkan Indofood CBP," jelas Dang dalam risetnya, kemarin.

Adapun dari penjualan kuartal I-2016, mi instan, susu, dan makanan ringan menjadi kontributor terbesar. Menurut Dang, produk mi instan yang berkontribusi 66% dan tumbuh 8,3% yoy didukung oleh peningkatan penjualan mi cup dan kenaikan harga pada awal tahun sebesar 5%.

Sementara itu, untuk produk dairy yang berkontribusi 19% mencatatkan pertumbuhan kuat yakni 30,8% yoy. Menurut manajemen Indofood CBP, sebut Dang, upaya menggenjot penjualan dengan memperkuat distribusi dan pemasaran sejak tahun lalu telah menunjukkan hasil.

Dang menambahkan, perseroan memiliki potensi baik ke depannya, karena memiliki inovasi yang progresif dan posisi yang dominan di sektornya, serta posisi neraca keuangan yang kuat. Ia merekomendasikan beli saham ICBP dengan target harga Rp 18.400 per saham. Pada perdagangan Senin (9/5), ICBP ditutup pada harga Rp 15.400 atau menguat 0,33%.

$ICBP $INDF

Bull
P H
May 03,2016 08:56:12
Indofood Sukses - Support from margin expansion

INDF's 1Q16 results were above estimates (29% FY16F) on better-than-expected margin. We subsequently raised our FY16-17F earnings estimates by 10-11% and upgraded our TP to IDR8,500 from IDR8,000. Our new TP implies 20% discount to our SOTP valuation, similar to previous TP, or 18x PER FY17F. Maintain BUY as we expect INDF to benefit from its exposure to the CBP business and El Nino’s positive impact on its agribusiness.

$INDF $ICBP $LSIP $SIMP
Bull
P H
Apr 29,2016 09:42:41
Indonesia: 12th stimulus policy – Further Streamlining in Various Permits
 
The government released the details of its 12th stimulus policy, which mostly aim to further simplify various permits in doing business. While the latest policy appears to be an accentuation of previous stimulus to streamlines business process, in our view the government continues to show its focus to attract more investment into domestic economy, especially given sizeable contribution from Gross Fixed Capital Formation (GFCF) to overall Indonesia’s economy.
 
Efforts to lure more investment
President Joko Widodo through several cabinet meetings has emphasized his means to increase the rating of the country’s Ease of Doing Business (EODB) to the 40th rank. The World Bank surveyed that Indonesia stood at rank 109th from a total of 189 surveyed countries. Other ASEAN countries such as Singapore and Malaysia stand at the 1st and 18th rank of the list. Currently, there are 10 indicators that measure the EODB rank for a country. The indicators are business starting process, construction permit dealing process, tax payment, credit accessibility, contract enforcement, electricity supply, across border trading, insolvency settlement, and minority investors protection. To comply with the indicators, the Indonesian Economic Ministry along with the Investment Coordinating Board formed deregulations through the 12th Economic Stimulus.
 
Key points of the 12th stimulus policy
The 12th stimulus introduced a new deregulation scheme that will cut 94 procedures into only 49 procedures and 9 permits to only 6 permits. Furthermore, the stimulus package is followed by the release of 16 new regulations.
¨ For the business starting process, the initial regulation requires investors to go through 13 procedures that will take 47 days and IDR6.8m-7.8m to obtain Business Permit (SIUP), Company Registration (TDP), Deed of Establishment, location permit, and nuisance permit. With the deregulation, investors will only need 7-10 days procedure with IDR2.7m fee. Moreover, the government will only require 3 permits for micro, small and medium enterprises (MSME), which are SIUP, TDP, and deed of establishment.
¨ The government also released a new regulation through regulation no 7/2016 on changes in authorised capital for limited company. With the new regulation, MSME’s authorised capital will be determined by mutual agreement of the founders as outlined in the deed of establishment. However, the regulation will keep enacting the minimum requirement of IDR50m for limited company.
¨ As for building construction permit, the government will cut the process into 14 procedures within 52 days from initial of 17 procedures and 210 days of processing time. Moreover, the building construction permit fee will be reduced to IDR70m from the initial fee of IDR86m.
¨ Tax payment process will be cut into 10x payments with online system from an initial of 54x payments. While property registration will be cut into 3 procedures in 7 days with a fee of 8.3% from the value of property. The government previously imposed 5 procedures with 25 processing days and 10.8% fee for the property registration.
¨ The government also decreases the simple lawsuit settlement process to only 8 procedures in 28 days. Any disagreement on the verdict will be able to appeal with additional 3 procedures and maximum of 10 days of settlement.
 
Follow-up measure to reduce overall execution risk

Before the release of the 12th stimulus package, the government has released a total of 195 regulations from September 2015- April 2016. The government stated that as of 18 April, it has successfully completed 169 regulations or 87% from the total regulation released. There are 16 (8%) regulations that are still in the discussion process, while the remaining 10 regulations that will be taken out from the Economic Stimulus Package. The government stated that each packages received positive responses from investors and citizens. However, the government will increase its socialisation and evaluate the implementation through dissemination and business clinics. The business clinics aimed to further discuss the stimulus packages with stakeholders to ensure the on the ground efficiency of the packages. Moreover, the business clinic will also serve as the communication facility between investors and government to resolve any problems, including the export increment issues. The clinics and dissemination will be implemented in 3 regions, such as Palembang, Balikpapan, and Lombok.
 
The near term catalyst is the tax amnesty approval
We continue to believe that tax amnesty approval could serve as one of major catalyst in the near term. Post the Parliament’s recess session, the long-awaited tax amnesty bill is finally being discussed under the Commission XI, which has been holding hearing sessions with experts, business leaders and other stakeholders. Given its importance on the overall budget and the progress of infrastructure development, the Government is mulling over the fact that the bill could take effect in June. We believe the initial approval of the tax amnesty could be an important catalyst for the near term, as well as a major step taken in the right direction to finally foster the compliance of taxpayers – which could help solidify the Government’s overall budget composition going forward. As such, we expect further foreign fund inflows to support the market post the approval of the tax amnesty although we acknowledge that execution risks still remain at this juncture. Our top pick in the market are $BBCA, $BBTN, $ICBP, $INDF, $ADHI, $LPPF, $MIKA, $TLKM, $BSDE and $LSIP.


Bull
P H
Apr 18,2016 08:54:59
Indofood Sukses Makmur(INDF) - EBIT Lifted By Consumer And Agri Units
 
We maintain BUY on Indofood with a higher IDR8,600 TP (from IDR7,150, 20% upside) as we changed our valuation base to SOP (from P/E). Higher consumer branded products (CBP) and agribusiness earnings should boost its EBIT, thanks to lower input costs and a higher CPO price. In addition, an improved distribution network should enable Indofood to identify the sales trend for each region, which could boost its sales. Key risks to our call include a significant decline in the price of CPO.

¨ Better CBP EBIT. Indofood Sukses Makmur’s (Indofood) CBP division, which produces noodles, should benefit from lower flour costs – which makes up the main cost of its inputs. In 1Q16, flour prices declined 2-3% from lower commodity wheat prices and a stabilised IDR. We think flour prices should decline further on the back of a downtrend in wheat prices and the entry of new players, which commonly set their prices lower than those of existing players. This could lead to price competition and ultimately benefit CBP players.

¨ Accelerating EBIT for agri unit. Its agribusiness should directly benefit from a higher CPO price due to lower supply. We estimate that the disruption in CPO supply after last year’s El Nino could boost the average CPO price by 14% YoY to IDR8,000/kg in 2016F (2015: IDR7,000/kg). Since most agribusiness’ costs are fixed, a higher CPO price should increase EBIT significantly.

¨ Strengthened distribution network. Its distribution arm aggresively expanded its network by establishing new branches, adding stock points and increasing the number of registered retail outlets. It also strengthened its logistics capabilities, by adding sales team workforces. Indofood aims to grow its penetration – especially in rural areas – by expanding its outlets.

¨ Likely to maintain dominant position in flour. Despite new flour producers flooding the Indonesian market for the past three years, Bogasari – the largest local flour producer – has maintained its market share of ~60%. This year, Wings and Mayora group are expanding and building new flour mills. This should not hurt Bogasari’s position, in our view, thanks to its strong brand names. To deal with rising competition, Bogasari will focus on maintaining its current customers and helping them to grow faster than the industry average.

¨ Maintain BUY. We raise our TP – which is now based on SOP (from P/E previously) – to IDR8,600 (from IDR7,150). Our TP implies 19x/17x FY16F/FY17F P/Es. Indofood’s FY15 earnings fell to IDR3trn (-25% YoY), driven by higher unrealised forex losses on foreign currency-denominated debts which caused financing costs to surge. However, its FY15 core earnings were still in line with expectations. Hence, we maintain our FY16F/FY17F core earnings at IDR3.6trn/4.1trn.

$INDF $ICBP $LSIP $SIMP
Bull
P H
Apr 07,2016 08:47:29
Indofood CBP Sukses Makmur: Noodle premiumisation?

With ~75% market share in the world’s second largest instant noodle market, is it a surprise that ICBP trade at 25/22x 16/17 earnings?
 
This morning, Merlissa highlights that ICBP’s strong noodle volume was driven by improving demand conditions.  Better cup noodle performance also indicated that consumers have started to trade up.
 
Rationale is quite straight forward.  During 2015 consumers traded down along with the slower economy, and on recovery they are trading back up.  Merlissa points to Philippine’s consumer company, Universal Robina Corp, as proof (which targets lower end segment demographics).
 
For Indonesians, ‘cup’ noodle is a premium product to ‘bagged’ instant noodle.  And as a portion of total instant noodle consumed, cup noodle is still much smaller given affordability and tast factors of Indonesian consumers.
 
Since the beginning of 2016 ICBP has been pretty aggressive in launching new products including soup-based fried noodles.  Merlissa estimates noodle volume to growth by c3% in 2016CL from a low base of 1% volume growth in 2016.  Noodle margins should also be strong given lower soft commodity prices.
 
Given its YTD strong performance Merlissa has an outperform rating on ICBP but highlights that upside risk in earnings can come from mark to market on a stronger rupiah than assumed by most companies (14,000 – 15,000).  
 
If the rupiah stays around current level or up to 13,500, ICBP could see 12-15% of earnings upside to our present estimates.  Please see Merlissa’s report for more on Indo’s instant noodle king, ICBP. 

$ICBP $INDF
Bull
P H
Apr 29,2015 08:00:19
Indo Strategy - Positioning amidst slowest growth in a decade Too early to bottom fish The market sharp sell-down may appear excessive, yet we think it may be too early to be an aggressive buyer. The outlook of subdued growth outlook, probably a bit slower, broader and longer lasting than most envisaged, suggests it is still better to seek out stocks with relative earnings visibility. Indeed there is little indication to suggest this slowdown has stabilized thus far. Broad based slowdown Growth that was designed to slowdown in order to rein in CAD, e.g. BI allowing Rp to weaken for an essentially dollarized economy, has proven to be very potent. Weaker commodity prices along with the transition easing from the recent investment surge may well have contributed as well. Indeed, the recent earnings trend suggests a more pronounced and broad-based slowdown. This ranges from large ticket items to even basic consumer staples. Bellwether FMCGs that have already reported are showing that top-line growth running at a decade low pace (ex-GFC period); a reflection of weaker buying power and rising competition. Equally, we have also noticed an uptick in NPL though more toward the SME and micro segments. In addition, our channel checks across various industries, including bellwether consumer packaging, mostly reported a deteriorating environment. Slower and longer? Contrary to general expectations, we think it is premature to assume an economic recovery in 2H15. Indeed sub-5% growth for the year cannot be ruled out. Recently the capex trend suggests easing post the initial surge 3-4 years ago. That along with the job creation trend, easily half the pace seen in the past couple of years, is not supportive of any fast economic recovery in the second half. While we remain upbeat that the govt. infrastructure spending will be punchier into 2H, we think the direct economic impact would be muted. Indeed the more powerful multiplier effect will only be visible in the medium term. Indeed there is little indication to suggest this slowdown has already stabilized. As such, we believe stock picking toward earnings visibility and predictability will be key in this 'new normal'. Macro improving vs Micro worsening - Market context In balance, we think the market downside risk is limited; yet we think it may be too early to be an aggressive buyer. We think the macro environment is turning more positive, e.g. CAD possibly below BI's guidance of 1.6% in 1Q, along with easing inflation, etc. Politics too, seems to have stabilized, which should pave the way for the govt. to kick-start major infrastructure projects. Yet, faced with the possibly of the slowest growth in a decade (ex-GFC), along with flow favoring North Asia, we think stock picking towards better earnings visibility matters, notwithstanding the fact that initial sell-down tends to be indiscriminate. Within our DB Portfolio stocks, we think the following have high earnings visibility: BBCA and BBNI (Banks), TLKM (Telco), ICBP and KLBF (Consumer). Conversely, stocks that have done well in spite of worsening earnings fundamental such as ASII and UNTR appear more exposed. $IHSG
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P H
Apr 10,2015 22:18:21
itungan bull dan BEAR nya salah nih pasti.. karena baru satu bull tapi di sentiment cuman 1%. Harusnya kan 100% $BBRI $ICBP
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P H
Apr 10,2015 01:36:03
ICBP atau INDF bagus tapi dari harga sekarang prefer beli INDF
Bull