January 5, 2015
Indofood Sukses Makmur
Dian Octiana
Company Focus
(dian.octiana@trimegah.com)
Removal of Minzhong overhang
INDF received an offer to sell 53% of MINZ for profit
INDF received an offer on 31 Dec’ 14 to sell 347mn shares (52.9%) in
China Minzhong Food Corporation Ltd. (MINZ). INDF owns 573mn
shares (83%) of China Minzhong. The offer is at SGD1.20 per share of
China Minzhong, higher than INDF’s average purchase price of SGD1.08
per share (INDF bought the stakes through various stages in 2013).
Removal of an overhang
We see this as a positive development due to: 1) It removes an overhang on INDF, given that ~44% of INDF’s revenue driven by ICBP
(market has always been skeptical on Minzhong acquisition) particularly
as INDF would be able to sell Minzhong at profit, and 2) INDF would be
able to book Rp383bn profit if it decides to take the offer at SGD1.20/
share (8% of 2015 net profit estimate).
Indofood is one of the most recognizable
companies in Indonesia, with many of its
products leading the market in their
respective segments.
BUY
Buy with 13% upside to TP Rp8,400
There is plenty of upside to our SOTP (Sum-of-the-parts) based target
price of Rp8,400. We still use Rp10,200 for ICBP (INDF has 81% stake)
and SGD0.85 for China Minzhong. ICBP’s share price has increased by
+26% within one year, while INDF’s share price only grew by +11%.
Indofood’s share price went up by 10% last Friday due to Minzhong offer
news but we think there is further upside. Buy.
Rp8,400
Company Update
Share Price
Sector
Price Target
Rp7,450
Consumer
Rp8,400(13%)
Stock Data
Timeline of Minzhong transactions by INDF:
1. On 15 February 2013, INDF entered into an agreement with
MINZ to buy 98.000.000 new shares at SGD0.915/share.
2. On 22 February 2013, INDF increased its stake in MINZ to
29.33% through the acquisition of 94.245.382 shares from Tetrad
Ventures Pte. Ltd. at SGD1.12.
3. On 23 August 2013 to 2 September 2013, INDF increased its
shareholdings in MINZ to 33.49% through secondary market, which
triggered the obligatory tender offer. On 2 September 2013, the
company announced a tender offer for the remaining issued shares
of CMFC owned by remaining shareholder, with the offer price at
SGD1.12/share.
4. On 6 November 2013, the company owned 543.252.517 shares
or 82.88% of the MINZ’s total number of issued shares.
5. On 31 December 2014, Indofood received an offer to sell 347mn
shares (53%) of China Minzhong at SGD1.20/share.
Reuters Code
Bloomberg Code
Issued Shares (m)
Mkt Cap (Rpbn)
Avg. Value Daily
6 month (Rpbn)
52-Wk range (Rp)
INDF.JK
INDF.IJ
8,780
65,414
62.2
7800 / 6325
Major Shareholders
CAB Holdings Ltd, Seychelles
Public
50.1%
49.9%
Consensus
EPS
Consensus (Rp)
TRIM vs Cons. (%)
14F
474
(3.8)
15F
546
7.0
Companies Data
Year end Dec
Sales
Net Profit
2012
2013
2014F
2015F
2016F
50,202
57,732
69,841
77,512
86,040
3,261
2,504
4,004
5,129
5,668
Stock Price
Volume
Price
9,000
40,0 00,00 0
8,000
35,0 00,00 0
7,000
EPS (Rp)
EPS Growth (%)
DPS (Rp)
BVPS (Rp)
P/E (x)
Div Yield (%)
371
285
456
584
645
6.0%
-23.2%
59.9%
28.1%
10.5%
175
185
142
227
291
2,415
2,693
3,153
3,848
4,734
20
2.3%
26
2.5%
PT Trimegah Securities Tbk - www.trimegah.com
16
1.9%
13
3.0%
12
3.9%
30,0 00,00 0
6,000
25,0 00,00 0
5,000
20,0 00,00 0
4,000
15,0 00,00 0
3,000
10,0 00,00 0
2,000
5,00 0,000
1,000
Jul-13
S ep -1 3
N ov -1 3
Ja n-14
Ma r-14
M a y-14
Jul-14
COMPANY FOCUS
1
Income Statement (Rpbn)
Year end Dec
Revenue
Balance Sheet (Rpbn)
2012
2013
2014F
2015F
2016F
Year end Dec
2012
2013
2014F
2015F
2016F
50,202
57,732
69,841
77,512
86,040
Cash and equivalents
13,346
13,666
12,493
15,035
18,730
Other curr asset
12,890
18,798
21,895
24,300
26,974
Net fixed asset
15,805
23,028
28,853
32,236
35,928
Other asset
17,348
22,600
25,639
27,445
29,415
Total asset
99,017 111,047
Growth (%)
9.7%
15.0%
21.0%
11.0%
11.0%
Gross Profit
13,591
14,330
17,335
19,240
21,356
6,753
6,089
8,335
9,319
10,434
Opr. Profit
EBITDA
Growth (%)
8,242
8,023
10,778
11,956
13,423
2.7%
-2.7%
34.3%
10.9%
12.3%
Net Int Inc/(Exp)
(390)
(656)
(1,344)
(1,571)
(1,598)
Gain/(loss) Forex
(144)
(1,568)
(614)
243
0
98
6,317
(1,531)
(1,518)
802
4,667
(1,252)
(913)
434
6,811
(1,703)
(1,104)
482
8,473
(2,118)
(1,226)
535
9,371
(2,343)
(1,360)
Other Inc/(Exp)
Pre-tax Profit
Tax
Minority Int.
Extra. Items
Reported Net Profit
(7)
2
0
0
0
3,261
2,504
4,004
5,129
5,668
59,389
78,093
88,881
ST debt
3,114
7,928
9,032
9,404
9,751
Other curr liab
9,692
11,543
12,885
13,912
15,013
LT debt
8,354
15,324
17,840
19,025
20,257
Other LT Liab
4,090
4,924
5,608
5,836
6,048
Minority interest
12,934
14,725
15,829
17,054
18,415
Total Liabilities
38,183
54,444
61,194
65,232
69,483
Shareholders Equity
21,206
23,649
27,687
33,785
41,563
Core Net Profit
3,369
3,679
4,464
4,947
5,668
growth (%)
8.1%
9.2%
21.3%
10.8%
14.6%
175
185
142
227
291
Total cap employed
46,584
58,621
66,963
75,700
86,283
growth (%)
31.6%
5.7%
(23.2%)
59.9%
28.1%
Net Working capital
3,199
7,255
9,010
10,388
11,961
Div. payout ratio
49.9%
49.8%
49.8%
49.8%
49.8%
Debt
11,468
23,253
26,873
28,429
30,008
Dividend per share
Cash Flow
Net (debt) / cash
2012
2013
2014F
2015F
2016F
Core Net Profit
3,369
3,679
4,464
4,947
5,668
Profitability
Depr / Amort
1,489
1,934
2,443
2,637
2,989
(1,536)
4,057
1,755
1,377
1,573
Others
4,096
(2,742)
3,944
5,595
6,035
CF's from oprs
7,419
6,929
12,606
14,556
16,264
Capex
(5,215)
(10,930)
(7,706)
(5,485)
(6,033)
Others
121
(3,472)
(4,216)
(4,687)
(5,210)
CF's from investing
(5,093)
Net change in debt
(58)
11,785
3,276
1,544
1,607
(2,251)
(4,994)
(4,240)
(3,700)
Others
CF's from financing
(14,402) (11,921) (10,172) (11,244)
(2,309)
Net cash flow
6,791
(964)
(2,157)
2014F
2015F
2016F
Gross Margin (%)
27.1%
24.8%
24.8%
24.8%
24.8%
Opr Margin (%)
13.5%
10.5%
11.9%
12.0%
12.1%
EBITDA Margin (%)
16.4%
13.9%
15.4%
15.4%
15.6%
6.7%
6.4%
6.4%
6.4%
6.6%
ROAE (%)
16.1%
11.2%
15.6%
16.7%
15.0%
ROAA (%)
5.8%
3.6%
4.8%
5.5%
5.4%
Core Net Margin (%)
Stability
1.7
1.6
1.7
1.8
0.1
(0.4)
(0.5)
(0.4)
(0.3)
(3,439)
Net Debt to EBITDA (x)
0.2
(1.2)
(1.3)
(1.1)
(0.8)
(1,832)
Interest Coverage (x)
7.2
5.5
4.6
4.7
4.9
32
36
36
36
36
2,228
3,188
Cash at BoY
13,055
13,346
13,666
12,493
15,035
Cash at EoY
13,346
13,666
12,493
15,035
18,730
2,875
(8,485)
(766)
2,764
3,208
Interim Results
Efficiency
A/P (days)
A/R (days)
27
27
27
27
27
Inventory (days)
71
67
67
67
67
Capital History
3Q13
4Q13
1Q14
2Q14
3Q14
14,417
16,453
16,366
17,700
16,327
Gross Profit
3,572
4,302
4,291
5,071
4,259
Opr. Profit
1,554
1,774
2,007
2,247
1,650
Net profit
2013
2.0
(279)
Sales
2012
Net Debt to Equity (x)
(682)
Year end Dec
Year end Dec
Current ratio (x)
17
Free Cashflow
(9,586) (14,379) (13,394) (11,278)
Key Ratio Analysis
Year end Dec
Chg in non-cash
1,878
219
582
1,373
916
740
Gross Margins (%)
24.8%
26.2%
26.2%
28.6%
26.1%
Opr Margins (%)
10.8%
10.8%
12.3%
12.7%
10.1%
Net Margins (%)
1.5%
3.5%
8.4%
5.2%
4.5%
PT Trimegah Securities Tbk - www.trimegah.com
Date
14-Jul-94
IPO @ Rp6,200
COMPANY FOCUS
2
PT Trimegah Securities Tbk
Gedung Artha Graha 18th Floor
Jl. Jend. Sudirman Kav. 52-53
Jakarta 12190, Indonesia
t. +62-21 2924 9088
f. +62-21 2924 9150
www.trimegah.com
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