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November, 13 2012
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Recommendation
Upside Potential
range
of
products
providing
everyday
food
Buy
16.7%
Stock Fokus
Sector
Ticker (Bloomberg)
ICBP.IJ
5,830
42.274
Major Shareholders:
PT Indofood (INDF)
Publik
for
noodles
division.
We
predict
the
2010
17,960
2,519
1,704
344
2011
19,367
2,745
1,975
339
-1.5%
12.7%
14.1%
10.0%
13.7%
19.6%
14.8
2.91
13.6%
19.3%
14.7
2.83
13.8%
19.4%
19.0
3.50
14.3%
19.6%
16.63
3.09
14.1%
19.2%
15.1
2.76
growth
ROA (%)
ROE (%)
P/E (x)
PBV (x)
2012E
21,820
3,114
2,227
382
2013F
23,953
3,554
2,541
436
2014F
26,426
3,909
2,796
479
EQUITY RESEARCH
Indonesia GDP figure was at 6.17% in the third quartal of 2012. Reliances estimates of GDP
until the end of 2012,
purchasing power increases. Realization of investment in Q3 2012 for the food processing
industry reached 11.8% of total domestic investment (DCI)
With a population of over 250 million people & 45 million middle class , Indonesia is a country
that has a huge potential market. The survey of consumer behavior found that food &
Stock Fokus
beverage products has become the most daily consumer goods purchased by consumers,
where 25.4% is used for instant noodles shopping.
Macro Assumption
GDP growth (% yoy)
Inflation rate (% yoy)
BI rate (% yoy)
Exchange Rate (Rp/USD, average)
2010
6.1
6.96
6.5
9,741
2011
6.5
3.79
6
8,779
2012E
6.3
5.3
5.75
9,550
2013F
6.5
5.1
5.75
9,500
13.7
Vietnam
14.3
Thailand
33.7
81%
Singapura
44.5
India
47.1
Malaysia
50.9
Indonesia
Rice
12.85
20
40
Cooking Oil
Sugar
60
Source : Kompas
EQUITY RESEARCH
Instant Noodles
ICBP has been producing noodles with a brand named Sarimi in 1982. Then it continued
issuing instant noodles with various well known brands in the community that is Indomie,
Supermie, and Pop Mie. The company has been a market leader of instant noodle
Stock Fokus
manufacturer. ICBP diversified its business by developing products and special nutritional
foods, then set up a joint venture with Seven-Up Nederland BV which is an affiliated company
PepsiCo Inc. that manufactures snack food. The Company launched the first brands such as
Chitato, Chiki, and Jetz, then Qtela.
In the subsequent years, ICBP expanded to seasoning food division (1991), and later diary
(2008) by acquiring Drayton Pte. Ltd. which has a 68.87% stake in PT Indolakto that produces
brands such as Bendera and Indomilk. In 2012, the company established a joint venture with
a well known Japanese consumer company, namely Asahi Group Holdings LTd. Diversified
business ensued with the joint venture, the company will enter into a non-alcoholic beverage
business clients division.
EXHIBIT 5. Ownership Structure
INDF.IJ
Consumer Branded
Products
Bogasari
Agribusiness
Distribution
80.5%
Public
19.4%
ICBP.IJ
Source : Company
1982
1985
Go to the division of
nutrition and special
foods, Promina
launched as the first
brand, followed by
the brand "SUN" in
1989
EQUITY RESEARCH
1990
1991
Log into division flavoring
foods with soy products
named Piring Lombok and
Niki Echo. In 1992, the
brand launched Indofood
soy sauce and seasoning
for instant products.
2005
2008
The Company began dairy
division by acquiring
Drayton Pte Ltd. Which has
65.87% of PT Indolakto,
which is the second largest
player in the Indonesian
dairy industry
Stock Fokus
Strength
Market leader for instant noodles
product. Even, Indomie has
become a very common term to
call instant noodles in Indonesia.
Taste has adhered in society.
Strong distribution reach areas in
Indonesia. Supported by the
spread of production facilities.
Opportunity
Increased purchasing power,
as economic conditions
improved
Lifestyle of modern society,
which led to increased
demand for food and
beverages that can be quickly
cooked
Product Diversification
Weakness
Most of the raw materials are
imported, thus the fluctuation of
exchange rate are affect gross
profit margin result
Threat
Fluctuating commodity prices
High levels of competition
Negative sentiment toward
the content of the product
Source : Reliance Research
EQUITY RESEARCH
Stock Fokus
period last year noodles sales growth of 8% and 0.4%. Thus in third quarter, volume grew
12.1% from 8.31 billion in 2011 to 9.32 billion in 2012.
Exhibit 7. Noodles Market Share
1,600.0
13.00
Others
12.00
Sarimi
0.9%
Gaga mie
11.50
12.54
12.18
12.03
11.82
10.82
10.50
3.0%
400.0
10.00
Mie Sedap
23.0%
0.0%
200.0
9.50
Indomie
69.6%
10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0%
1,000.0
600.0
11.05
11.03
1,200.0
800.0
11.45
11.00
1.2%
Supermie
1,400.0
12.92
12.50
2.3%
2007
2008
2009
2010
Volume
ASP
Source : Company, Reliance Research
Dairy Division
Dairy produced by IDLK, a subsidiary of the company with a 68.6% ownership. This division
produces sweetened condensed milk (SKM), ultra-high temperature milk (UHT), milk in sterile
bottles, pasteurized milk, milk powder, butter, yogurt and ice cream drinks. Dairy is the
second largest contributor of total consolidated sales of approximately 19.1% in 2011. The
company is currently building a plant to increase production capacity. We see that Indonesia
has a huge potential market for dairy division.
Exhibit 10. Indonesia Dairy, Milk, Nonfat Dry Consumption/ Year
25%
20%
1,014
894
806
1,200
1,064
938
904
12% 12%
600
8%
9%
6%
3%
5%
1,000
800
19%
15%
10%
980
400
200
0%
11Q1
11Q2
11Q3
Dairy
11Q4
12Q1
12Q2 12Q3e
Growth YoY
Source : Company, Reliance Research
EQUITY RESEARCH
Snack Food
Stock Fokus
Some brands of snacks like-Qtela, Chitato, Lays, Jetz, Cheetos, Chiki, Trenz, and Wonderland are known
successfully in the community. Produced by IFL which is a joint venture ICBP (51%) with Seven-Up
Netherlands, BV (an affiliate of PepsiCo Inc.). In 2011 contributed 2.64%, on third quarter grew 24%
(YoY), and slightly decline 0.3% in QoQ growth due to Eid Season in last quarter was over. Snack food
booked highest growth year on year this year.
Dairy, 19%
Food
Seasoning, 5
%
Snack
Food, 6%
Special
Food, 3%
Noodles, 70%
11Q1
11Q2
Noodles
11Q3
11Q4
12Q1
Dairy
Food seasoning
12Q2
12Q3
Snack Foods
12Q4e
Special Foods
Total Sales
Noodles
Dairy
Food Seasoning
Snack Food
Nutrition & Special Food
11Q3
5,027
3,583
894
274
308
102
12Q3
5,309
3,809
904
291
382
100
YoY
5.6%
6.3%
1.1%
6.2%
24.0%
-2.2%
9M11
14,450
10,129
2,713
800
875
379
9M12
16,228
11,423
2,906
917
1,123
364
YoY
12.3%
12.8%
7.1%
14.7%
28.3%
-4.0%
Source : Company
EQUITY RESEARCH
Stock Fokus
Source :AAE
25.0%
27.7% 26.0%
26.7%
25.8% 25.8%
17.5%
20.0%
16.1%
15.0%
10.0%
5.0%
0.0%
2007
EQUITY RESEARCH
2008
2009
2010
2011
Stock Fokus
expanding noodle and dairy capacity. We estimate the dividend payout ratio will be at 50%,
while management has distribute 40% dividend payout ratio for 2010s net profit.
Valuation
We calculate the valuation using DCF method. We find fair value of Rp 8400 on a 2013 PE of
19.2x, far below the P/E industry of 32.16 and P/E sector of 32.12 (data: Reuters). We
believe there is still a chance for the stock price to increase after 34% gained (YTD). We are
optimist because ICBP has become a market leader in some of its products, the company's
instant noodles division has a pricing power to cover the cost of volatility spikes as occurred
in 2011. Meanwhile, corporate actions such as expansion of the company, over time, has
become a source of new revenue, the opportunity to pursue sales division of instant
noodles.
EQUITY RESEARCH
2009
2010
2011
Sales
16,333
17,960
19,367
21,820
23,953
26,426
COGS
12,420
12,977
14,336
16,200
17,776
19,378
Gross Profit
SGA Expenses
Other Operating income (Exp)
2013F
2014F
3,913
4,983
5,031
5,620
6,177
7,049
(1,598)
(2,113)
(2,347)
(2,391)
(2,816)
(3,069)
(177)
(105)
(33)
(32)
(32)
(32)
Operating Income
2,138
2,871
2,684
3,229
3,361
3,979
EBT
1,566
2,519
2,745
3,114
3,554
3,909
Tax
Stock Fokus
2012E
(430)
Minority Interest
Net Income
(770)
(878)
(966)
(667)
124
(679)
91
117
134
147
1,078
1,704
1,975
2,227
2,541
2,796
2009
2010
2011
2012E
2013F
2014F
696
3,408
4,421
5,462
6,261
7,527
1,476
2,026
2,378
2,372
2,737
3,012
BALANCE SHEET
Rp Bn
Cash
A/R
Inventory
1,311
1,422
1,630
1,774
1,972
2,158
Fixed Asset
2,180
2,305
2,590
3,207
3,653
4,252
Others
5,256
7,608
8,625
9,577
10,291
11,477
10,224
13,361
15,223
16,931
18,652
20,899
1,360
405
418
418
42
15
146
235
379
553
Total Asset
Others
3,579
3,950
4,192
4,612
5,002
1,625
9,362
10,710
12,086
13,661
15,344
10,224
13,361
15,223
16,931
18,652
20,899
2009
2010
2011
2012E
2013F
2014F
Net Profit
1,078
1,837
2,064
2,344
2,675
2,943
Depreciation
1,969
208
227
256
285
319
(266)
(209)
Total Equity
Total Liability and Equity
Cash Flow
Rp Bn
Working Capital
(94)
(214)
(396)
28
Others
(15)
158
172
42
87
97
1,988
2,067
2,671
2,781
3,149
2,939
(1,973)
Others
199
Investing Cash Flow
Change in Equity
Dividend
Others
Financing Cash Flow
Change in Cash
(1,774)
(1,685)
(332)
233
(99)
6,178
(144)
713
(5,211)
(972)
193
823
2,712
(512)
55
(457)
49
(676)
31
(597)
1,013
(873)
(730)
(918)
95
120
120
(779)
(610)
(798)
64
(1,032)
118
(850)
1,042
73
(1,172)
(273)
(1,373)
798
77
(1,338)
175
(1,085)
1,266
EQUITY RESEARCH
Stock Fokus
Sales
2010
2011
2012E
2013F
2014F
10%
8%
13%
10%
10%
Gross Income
27%
1%
12%
10%
14%
Operating Income
34%
-6%
20%
4%
18%
Net Income
58%
16%
13%
14%
10%
Gross margin
Operating margin
Net profit margin
RoA
RoE
28%
26%
26%
26%
27%
16%
14%
15%
14%
15%
Current Ratio
Quick Ratio
9%
10%
10%
11%
11%
14%
14%
14%
14%
14%
20%
19%
19%
20%
19%
2.6
2.9
3.1
3.7
3.9
2.0
2.3
2.5
2.9
3.2
0.00
0.01
0.02
0.03
0.04
Asset Turnover
1.3
1.3
1.3
1.3
1.3
Inventory Turnover
9.5
9.4
9.5
9.5
9.4
DER
EQUITY RESEARCH
10
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RESEARCH DIVISION
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Wilson Sofan
wilson.sofan@reliance-securities.com
jasa@reliance-securities.com
Monchita W. P.
monchita@reliance-securities.com
Christine Natasya
christine.natasya@reliance-securities.com
Stock Fokus
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Disclaimer:
Informasi, opini dan rekomendasi yang terdapat dalam dokumen ini disajikan oleh PT Reliance Securities Tbk. dari sumber-sumber yang
dianggap terpercaya dan dapat diandalkan. Dokumen ini bukan merupakan penawaran, invitasi atau representasi dalam bentuk apapun
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tanpa pemberitahuan terlebih dahulu.
EQUITY RESEARCH
11