Nov 16, 2015
Indofood Sukses Makmur
Dian Octiana
BUY for its undemanding valuation
(dian.octiana@trimegah.com)
We maintain BUY on INDF with TP of Rp6,800 (+31%). INDF trades at 39%
discount to its NAV and 33% discount to ICBP. Attractive for its undemanding valuation, and the near catalyst is its divestment finalization in Dec’ 15.
Soft performance expectation to continue
We expect Bogasari and agribusiness’ segment to continue deliver weak
performance in 4Q15, backed by continuous soft wheat and CPO price. In
9M15, bogasari and agribusiness’s EBIT margin were far below our prediction, hence, we cut our EBIT forecast of bogasari and agribusiness in FY1516F by 29-28% and 47-41%, respectively. Yet, we hope for slight rebound in
commodity prices in 1H16, backed by El-Nino effect, showing by gradual
increment in EBIT margin.
More clarity on Minzhong divestment
On 14 Oct’ 15, INDF and CMZ BVI have finally signed a MOU, stating that
CMS BVI agreed to pay SGD40mn on 30 Oct’ 15, as part of MINZ divestment. If the agreement is broken by any parts, MOU will be canceled and
INDF still have right for the money that has been paid. Previously, INDF got
an offer from CMZ BVI to buy its 52.94% stakes in MINZ at SGD1.20/share
(SGD416mn).
Loan restructuring in 4Q15
In 4Q15, INDF aims to hedge its US$240mn bank loan, of total US$1bn total
forex loan. Moreover, the company also considers to convert its US$ loan to
IDR. In 9M15, INDF has gross debt of Rp29.7tn, of which 44.8% is in foreign
currency denomination.
9M15 result: dragged by commodity related business and high finance expenses
In 9M15, INDF reported a declining net profit of 45% YoY to Rp1.7tn, was
far below TRIM at 36% and consensus at 46% (vs 72% in 9M15). EBIT
margin compressed by 50bps, as all of segments contributed negative EBIT,
but ICBP. INDF’s weak results was due to soft performance of its commodities related business (bogasari and agribusiness), following continuous weak
price of wheat and CPO, coupled with high interest expenses (+165% YoY).
Valuation
We obtain our TP of Rp6,800 (-21% from previous TP), by using SOTP
method with 20% discount holding (historical discount post MINZ acquisition). At Rp5,175, INDF is trading at ~39% discount to its NAV (vs 10%
historical), and at 14x 1-year fwd. P/E, lower than 36x JAKCONS PE FY16F.
Companies Data
Year end Dec
2013
2014
2015E
2016E
2017E
55,624
63,594
63,595
67,513
71,573
Net Profit
2,504
3,885
2,272
3,434
3,833
EPS (Rp)
Sales
285
443
259
391
437
-23.2%
55.2%
-41.5%
51.1%
11.6%
185
142
220
129
194
Indofood is one of the most recognizable
companies in Indonesia, with many of its
products leading the market in their
respective segments.
BUY
Rp6,800
Company Update
Share Price
Sector
Price Target
Rp5,175
Consumer
Rp6,800 (+31%)
Stock Data
Reuters Code
Bloomberg Code
Issued Shares
Mkt Cap. (Rpbn)
Avg. Value Daily 6
Month (Rpbn)
52-Wk range
INDF.JK
INDF.IJ
8,780
45,439
52.4
7725 / 4560
Major Shareholders
CAB Holdings Ltd, Seychelles
Anthoni Salim
Public
50.1%
0.02%
49.9%
Consensus
EPS
Consensus (Rp)
TRIM vs Cons. (%)
15F
388
-33.2
Stock Price
A v g . 5 D ay M A T r a d in g V a lu e (R H S )
9 ,0 0 0
P r ic e ( L H S )
(Rpbn)
2 5 0 .0
8 ,0 0 0
2 0 0 .0
7 ,0 0 0
EPS Growth (%)
DPS (Rp)
6 ,0 0 0
1 5 0 .0
5 ,0 0 0
4 ,0 0 0
BVPS (Rp)
P/E (x)
Div Yield (%)
2,596
2,859
3,003
3,265
3,508
18.1
11.7
20.0
13.2
11.9
3.6%
2.7%
4.3%
2.5%
3.8%
PT Trimegah Securities Tbk - www.trimegah.com
16F
472
-17.2
1 0 0 .0
3 ,0 0 0
2 ,0 0 0
5 0 .0
1 ,0 0 0
N o v -1 4
0 .0
J an -1 5
M a r-1 5
M a y -1 5
J u l-1 5
S e p -1 5
COMPANY FOCUS
N o v- 1 5
1
Figure 1. 9M15 Results - commodities related business dragged down the performance
3Q14
Revenue
2Q15
3Q15
QoQ
Chg.
(%)
YoY Chg.
(%)
9M15
15,398
17,614
14,929
-15.2%
-3.0%
47,564
Gross profit
4,034
4,844
3,915
-19.2%
-3.0%
Operating profit
1,553
2,014
1,453
-27.9%
-6.4%
754
861
(47)
-105.5%
-106.3%
Gross margin (%)
26.2%
27.5%
26.2%
27.1%
Operating margin (%)
10.1%
11.4%
9.7%
10.7%
4.9%
4.9%
-0.3%
3.5%
Net profit
Net margin (%)
YoY Chg.
(%)
9M15/
FY15F
(%)
9M15/
Cons.
(%)
1.5%
65.9%
70.1%
12,867
2.6%
66.8%
71.9%
5,083
-3.2%
58.6%
66.5%
1,684
-45.2%
35.7%
46.5%
Source: Company, TRIM Research
Figure 2. 3Q15 Results - quarterly overview by segments
3Q14
4Q14
1Q15
2Q15
3Q15
7,386
4,532
3,595
1,263
0
(1,378)
7,488
5,175
4,125
1,404
0
(1,480)
7,795
4,702
2,596
1,279
0
(1,351)
8,498
4,936
4,181
1,354
0
(1,355)
7,546
4,372
3,274
1,171
0
(1,434)
EBIT
ICBP
Bogasari
Agribusiness
Distribution
MINZ
Elimination
861
232
412
48
0
1
525
382
673
41
0
1
927
350
309
27
0
3
1,207
407
342
60
0
(2)
873
151
386
42
0
2
EBIT margin
ICBP
Bogasari
Agribusiness
Distribution
MINZ
Elimination
11.7%
5.1%
11.5%
3.8%
0.0%
0.0%
7.0%
7.4%
16.3%
2.9%
0.0%
0.0%
11.9%
7.4%
11.9%
2.1%
0.0%
0.0%
14.2%
8.2%
8.2%
4.5%
0.0%
0.0%
11.6%
3.4%
11.8%
3.6%
0.0%
0.0%
Revenue - net
ICBP
Bogasari
Agribusiness
Distribution
MINZ
Elimination
Source: Company, TRIM Research
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COMPANY FOCUS
2
Figure 3. Forecast changes following soft performance in commodity related business
Old
New
Chg (%)
2015
2016
2015
2016
2015
2016
ICBP
34,400
39,517
32,193
34,972
-6.4%
-11.5%
Bogasari
21,966
24,227
18,902
18,228
-14.0%
-24.8%
Agribusiness
16,825
19,022
13,429
15,299
-20.2%
-19.6%
5,825
6,587
5,135
5,452
-11.8%
-17.2%
ICBP
3,899
4,610
3,768
4,344
-3.4%
-5.8%
Bogasari
1,604
1,781
1,134
1,276
-29.3%
-28.4%
Agribusiness
2,519
2,848
1,343
1,683
-46.7%
-40.9%
221
253
154
218
-30.3%
-13.8%
11.3%
11.7%
11.7%
12.4%
7.3%
7.4%
6.0%
7.0%
15.0%
15.0%
10.0%
11.0%
3.8%
3.8%
3.0%
4.0%
Revenue
72,138
81,575
63,595
67,513
-11.8%
-17.2%
Gross profit
19,268
21,707
16,986
17,965
-11.8%
-17.2%
Opr. Profit
8,667
10,009
6,326
7,330
-27.0%
-26.8%
Net profit
4,711
5,269
2,272
3,434
-51.8%
-34.8%
Gross margin (%)
26.7%
26.6%
26.7%
26.6%
Opr. Margin (%)
12.0%
12.3%
9.9%
10.9%
6.5%
6.5%
3.6%
5.1%
Net revenue
Distribution
EBIT
Distribution
EBIT margin
ICBP
Bogasari
Agribusiness
Distribution
Net margin (%)
Source: Company, TRIM Research
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COMPANY FOCUS
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Figure 4. Declining trend in CPO price
Palm oil (MYR/metric tonne)
4,500
4,000
3,500
3,000
2,500
2,000
1,500
Figure 1. Declining
Source: Bloomberg, TRIM Research
Figure 5. INDF trades at higher level of discount
Wheat (USD/bu)
1,000
900
800
700
600
500
400
300
10-Nov-10
10-May-11
10-Nov-11
10-May-12
10-Nov-12
10-May-13
10-Nov-13
10-May-14
10-Nov-14
10-May-15
Source: Bloomberg, TRIM Research
Figure 1. Declining
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Figure 6. INDF’s share has underperformed ICBP since the beg. Of FY13
5-yr PE Band
ICBP Fw-PER
INDF Fw-PER
35.00
30.00
P/E (x)
25.00
20.00
15.00
10.00
5.00
19/11/10
19/05/11
19/11/11
19/05/12
19/11/12
19/05/13
19/11/13
19/05/14
19/11/14
19/05/15
Figure 1. Declining
Source: Bloomberg, Companies, TRIM Research
Figure 7. INDF trades at higher level of discount
Implied discount
NAV
MCAP
90,000
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
-50%
-60%
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
1Q11
3Q11
1Q12
3Q12
1Q13
3Q13
1Q14
3Q14
1Q15
3Q15
Source: Bloomberg, Companies, TRIM Research
Figure 1. Declining
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COMPANY FOCUS
5
Valuation
We reiterate our BUY call, with a 31% upside to TP Rp6,800 (-21% from previous TP of Rp8,600), based on SOTP
method by using 20% discount (as same as historical discount post MINZ acquisition). At Rp5,175, INDF is trading at
~39% discount to NAV (vs 10% historical), undemanding considering +51% YoY EPSg in FY16F. The near catalyst is
MIZ divestment finalization in Dec’ 15.
INDF trades at 14x 1-year fwd. P/E, lower than 36x JAKCONS PE FY16F. INDF’s share performance has started trading
at higher discount, and underperform ICBP when they took a majority stock in MINZ.
Figure 8. SOTP Calculation
Value
(Rp bn)
Business Segments
CBP
Bogasari
IFAR
Distribution
INDF's ownership
Equity Value
(Rp bn)
Calculation Method
96,794
80.5%
77,948
8,328
100.0%
8,328
Market value
Comparable EV/EBITDA
10,842
60.4%
4,371
Market value
1,517
100.0%
1,517
Comparable EV/EBITDA
Sub total
92,164
(17,477)
(-) Net debt
Total Equity Value
74,687
Shares (mn shares)
8.8
NAV/share (IDR)
8,506
discount
-20%
Target Price
6,800
Current price
5,175
% Upside
31%
Source: TRIM Research
Figure 9. INDF PE Valuation
5-yr PE Band
INDF Fw-PER
Fw-PER Avrg
Fw-PER + 1 STD
Fw-PER - 1 STD
25
20.5
P/E (x)
20
15.8
15
11.0
10
5
19/11/2010
19/05/2011
19/11/2011
19/05/2012
19/11/2012
19/05/2013
19/11/2013
19/05/2014
19/11/2014
19/05/2015
Source: Bloomberg, TRIM Research
PT Trimegah Securities Tbk - www.trimegah.com
COMPANY FOCUS
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Income Statement (Rpbn)
Year end Dec
Balance Sheet (Rpbn)
2013
2014
2015E
2016E
2017E
Revenue
55,624
63,594
63,595
67,513
71,573
Revenue Growth (%)
10.8%
14.3%
0.0%
6.2%
6.0%
Gross Profit
Opr. Profit
13,606
5,557
17,050
6,874
16,986
6,326
17,965
7,330
18,974
7,887
EBITDA
7,635
9,342
9,566
10,258
11,108
EBITDA Growth (%)
-9.6%
22.3%
2.4%
7.2%
8.3%
Net Int Inc/(Exp)
(584)
(882)
(1,016)
(1,161)
(1,267)
Gain/(loss) Forex
(976)
29
(1,842)
(258)
0
20
326
326
346
367
4,001
6,229
4,260
6,438
7,186
Other Inc/(Exp)
Pre-tax Profit
Tax
(1,177)
(1,828)
(1,250)
(1,890)
(2,109)
Minority Int.
Extra. Items
(913)
2
(1,261)
0
(737)
0
(1,115)
0
(1,244)
0
Reported Net Profit
2,504
3,885
2,272
3,434
3,833
Core Net Profit
3,236
3,863
3,654
3,628
3,833
Growth (%)
-4.0%
19.4%
-5.4%
-0.7%
5.7%
185
142
220
129
194
5.7%
-23.2%
54.9%
-41.5%
51.1%
49.8%
49.8%
49.7%
49.7%
49.7%
Dividend per share
Growth (%)
Dividend payout ratio
Cash Flow (Rpbn)
Year end Dec
Year end Dec
2013
2014
2015E
Cash and equivalents
13,666
14,158
12,779
9,906
6,215
Other curr asset
19,106
26,838
29,984
30,764
31,573
Net fixed asset
22,238
22,011
25,166
28,953
33,118
Other asset
22,768
23,087
25,002
26,895
28,968
Total asset
77,778
86,094
92,931
96,518
99,874
ST debt
12,032
10,096
13,674
13,119
12,069
7,439
12,586
13,634
13,871
14,118
15,324
16,838
16,582
17,067
17,856
6,098
6,301
6,767
6,767
6,767
Minority interest
14,092
15,170
15,907
17,022
18,266
Total Liabilities
54,986
60,990
66,564
67,846
69,076
Shareholders Equity
22,792
25,104
26,367
28,672
30,798
Net debt / (cash)
13,690
12,776
17,477
20,280
23,711
Total cap employed
58,307
63,413
65,624
69,528
73,687
Net Working capital
11,666
14,252
16,351
16,893
17,455
Debt
27,356
26,934
30,256
30,186
29,925
2013
2014
2015E
2016E
2017E
Other curr liab
LT debt
Other LT Liab
2016E
2017E
Key Ratio Analysis
2013
2014
2015E
2016E
2017E
Net Profit
3,236
3,863
3,654
3,628
3,833
Profitability
Depr / Amort
2,078
2,467
2,460
2,929
3,221
Gross Margin (%)
24.5%
26.8%
26.7%
26.6%
26.5%
(1,217)
1,861
(1,325)
(616)
(641)
Opr Margin (%)
10.0%
10.8%
9.9%
10.9%
11.0%
EBITDA Margin (%)
13.7%
14.7%
15.0%
15.2%
15.5%
5.8%
6.1%
5.7%
5.4%
5.4%
ROAE (%)
11.4%
15.9%
8.9%
12.5%
12.9%
ROAA (%)
3.8%
7.4%
4.4%
3.6%
3.9%
Current ratio (x)
1.7
1.8
1.6
1.5
1.4
Net Debt to Equity (x)
0.6
0.5
0.7
0.7
0.8
Net Debt to EBITDA
1.8
1.4
1.8
2.0
2.1
Interest Coverage (x)
5.3
4.6
4.0
4.4
4.7
A/P (days)
26
29
29
29
29
A/R (days)
25
23
23
23
23
Inventory (days)
68
64
64
64
64
Chg in Working Cap
Others
CF's from oprs
2,832
1,077
719
2,159
2,311
6,929
9,269
5,508
8,099
8,725
Capex
(10,930)
(6,051)
(7,650)
(8,415)
(9,257)
Others
(3,472)
(4,112)
(286)
62
75
CF's from investing
(14,402)
(10,163)
(7,936)
(8,353)
(9,181)
Net change in debt
12,033
(423)
3,322
(70)
(261)
Others
(5,242)
1,825
(432)
(2,291)
(2,974)
CF's from financing
6,791
1,403
2,891
(2,360)
(3,235)
Net cash flow
(682)
509
463
(2,615)
(3,691)
Cash at BoY
13,346
13,666
14,158
12,779
9,906
Cash at EoY
13,666
14,158
12,779
9,906
6,215
Free Cashflow
(3,712)
(588)
605
308
178
Interim Result (Rpbn)
4Q14
1Q15
2Q15
3Q15
15,398
16,712
15,021
17,614
14,929
Gross Profit
4,034
4,505
4,108
4,844
3,915
Opr. Profit
1,553
2,748
1,615
2,014
1,453
754
814
870
861
(47)
Gross Margins (%)
26.2%
27.0%
27.3%
27.5%
26.2%
Opr Margins (%)
10.1%
16.4%
10.8%
11.4%
9.7%
Net Margins (%)
4.9%
4.9%
5.8%
4.9%
-0.3%
Net profit
Core Net Margin (%)
Stability
Efficiency
Capital History
3Q14
Sales
Year end Dec
PT Trimegah Securities Tbk - www.trimegah.com
Date
14-July-94
IPO@Rp6,200
COMPANY FOCUS
7
PT Trimegah Securities Tbk
Gedung Artha Graha 18th Floor
Jl. Jend. Sudirman Kav. 52-53
Jakarta 12190, Indonesia
t. +62-21 2924 9088
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www.trimegah.com
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