Harry Wijaya [email protected]62-21 5207374 Batavia Stock Focus Kalbe Farma 1 October 2010 Stock Data Stock price chart Source : Bloomberg Source: Company, Batavia Prosperindo Sekuritas Nutrition for Growth • Solid Balance Sheet following strong performance KLBF’s strong performance during the last 5 years was indicated by a constant revenue growth and CAGR in net profit of 11,5% and 10%, respectively. Such a performance resulted in a solid balance sheet with a net cash position. As of 1H10, total cash equaled to Rp1,5 trillion, enough to cover all of the annual capital expenditure needed. Since there is ample cash, KLBF plans to give more value to its shareholders with a planned payout ratio of 25% in FY10, 30% in FY11, and 35% in FY12. • Market leader in prescription and Over-the Counter (OTC) products KLBF is the market leader in Indonesia’s pharmaceutical industry with a 14% market share of the Rp34 trillion pharmaceutical market. Most of KLBF’s gross profit came from this division, as prescription and OTC products offer gross profit margins as high as 63% and 55%, respectively. Since KLBF is dominant in the middle-high prescription segment and middle-low OTC segment, KLBF will survive during economic downturns and gain even more benefit from its prescription segment during economic booms. • Nutritional division, the key driver for KLBF going forward KLBF owns a 14% market share in the national nutrition market, making KLBF the 3rd biggest player in this industry behind global names such as Nestle with 30% market share and Danone with 26%. The nutritional division posted constant growth of 15,5% and the highest CAGR among other KLBF’s divisions for the last 5 years (2005-2009). Coupled with a high average gross profit margin of 55%, we expect the nutrition division to contribute more in the future. The division’s performance will depend on its marketing & brand activation strategy to promote KLBF’s complete dairy product portfolio in order to compete with multinational players in this segment. • Recommendation BUY, TP Rp3.000 Based on DCF valuation, we determine the target price of KLBF to be at Rp3.000, implying a 23,3X FY10 PE and 19,6X FY11 PE. We estimate that KLBF will post more good results in the coming quarters given the GoI’s initiatives to raise the country’s health spending from 2,5% to 5% of GDP. Other catalysts include the strong Rupiah currency and the bright performance of new products launched in the consumer health segments. Hence, we recommend a BUY on KLBF. Price Rp Target Rp Recommendation 52-weeks range Rp Market Cap (Rp bn) Outstanding shares (mn shares) Daily average volume (‘000 shares) Daily average value (Rp mn) 2.550 3.000 BUY 1.200-2.725 25,897 9,375 24,383 57,970 Major Shareholder Bina Artha Charisma Gira Sole Prima Ladang Ira Panen Lucasta Murni Cemerlang Diptanala Bahana Santa Seha Sanadi UBS AG Singapore Public 8.0% 9.4% 8.5% 8.7% 8.8% 8.9% 7.7% 40.0% - 1,000 2,000 3,000 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 KLBF Financial Highlights In IDR Billion 2007A 2008A 2009A 2010F 2011F Revenue 7,005 7,877 9,087 10,205 11,686 Gross Profit 3,552 3,804 4,512 5,192 5,943 Operating Profit 1,129 1,143 1,566 1,876 2,209 Net Profit 706 707 929 1,211 1,440 EPS 75 75 99 129 154 Difference w/ consensus - - - 2.5% 2.5% BVPS 361 386 460 637 745 Key Ratio 2007A 2008A 2009A 2010F 2011F P/E (X) 16.7 5.3 13.1 19.7 16.6 P/BV (X) 3.5 1.0 2.8 4.0 3.4 ROA 15.8% 14.5% 16.2% 16.9% 17.1% ROE 21.5% 19.7% 23.0% 24.0% 22.6% Key Assumption 2007A 2008A 2009A 2010F 2011F Revenue Growth (y-o-y) 15.4% 12.5% 15.4% 12.3% 14.5% Gross Profit Margin (%) 50.7% 48.3% 49.7% 50.9% 50.9%
Nutrition for Growth• Solid Balance Sheet following strong performance
KLBF’s strong performance during the last 5 years was indicated by a constant revenue growth and CAGR in net profit of 11,5% and 10%,respectively. Such a performance resulted in a solid balance sheet with a net cash position. As of 1H10, total cash equaled to Rp1,5 trillion, enough to cover all of the annual capital expenditure needed. Since there is ample cash, KLBF plans to give more value to its shareholders with a planned payout ratio of 25% in FY10, 30% in FY11, and 35% in FY12.
• Market leader in prescription and Over-the Counter (OTC) productsKLBF is the market leader in Indonesia’s pharmaceutical industry with a 14% market share of the Rp34 trillion pharmaceutical market. Most of KLBF’s gross profit came from this division, as prescription and OTC products offer gross profit margins as high as 63% and 55%, respectively. Since KLBF is dominant in the middle-high prescription segment and middle-low OTC segment, KLBF will survive during economic downturns andgain even more benefit from its prescription segment during economic booms.
• Nutritional division, the key driver for KLBF going forwardKLBF owns a 14% market share in the national nutrition market, making KLBF the 3rd biggest player in this industry behind global names such as Nestle with 30% market share and Danone with 26%. The nutritional division posted constant growth of 15,5% and the highest CAGR among other KLBF’s divisions for the last 5 years (2005-2009). Coupled with a high average gross profit margin of 55%, we expect the nutrition division to contribute more in the future. The division’s performance will depend on its marketing & brand activation strategy to promote KLBF’s complete dairy product portfolio in order to compete with multinational players in this segment.
• Recommendation BUY, TP Rp3.000Based on DCF valuation, we determine the target price of KLBF to be at Rp3.000, implying a 23,3X FY10 PE and 19,6X FY11 PE. We estimate that KLBF will post more good results in the coming quarters given the GoI’sinitiatives to raise the country’s health spending from 2,5% to 5% of GDP. Other catalysts include the strong Rupiah currency and the bright performance of new products launched in the consumer health segments. Hence, we recommend a BUY on KLBF.
Company Background: PT Kalbe Farma Tbk (KLBF) was incorporated in 1966 and emerged as a public company in 1991 upon listing of its shares in the Indonesia Stock Exchange. KLBF is the largest publicly listed pharmaceutical manufacturer in Southeast Asia with market coverage in 9 countries, having a combined total population of 570 million people.
Supported by over 10,000 employees, inclusive of 4,000 sales and marketing professionals, KLBF maintains its coverage of over 70% of general practitioners, 90% of specialists, 100% of hospitals and 100% of pharmacies in Indonesia for the prescription pharmaceuticals market and 80% for the consumer health market, amounting to 150,000 outlets throughout Indonesia.
KLBF is divided into four main divisions: Prescription, Consumer Health, Nutrition, and Distribution. In FY2009, KLBF owned 14% share of Indonesia’s pharmaceutical market. The total Indonesian pharmaceutical market was Rp34 trilion in 2009.Segmental Contribution to Revenue 1H10 KLBF market share’s in Prescription & OTC market
Source : Company
Prescription26%
Nutritional21%
Distribution34%
Consumer Health19%
Source : Company Source : Company, IMS Health Prescription Pharmaceutical FY 2009
KLBF’s four divisions
-
500
1,000
1,500
2,000
2,500
3,000
Q30
5
Q10
6
Q30
6
Q10
7
Q30
7
Q10
8
Q30
8
Q10
9
Q30
9
Q11
0
0%
10%
20%
30%
40%
50%
60%
Revenue Operating Margin (RHS)Gross Margin (RHS) Net Profit Margin (RHS)
1 October 2010
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KLBF 1H 2010 Financial Highlights KLBF Revenue (In IDR bio)
Source : Company
1H10 performance inline with our forecast
In 1H10, KLBF booked total revenue of Rp4,7 trillion and net profit of Rp572 billion, achieving 45% of our forecasts for the year. The good result was due to a stronger Rupiah which lowered the company’s COGS.
KLBF’s total revenue of Rp 9,09 trilion in 2009 came mainly from the distribution division with a 35% contribution. To further boost revenue, KLBF implemented its long-term strategy (2006-2015) to expand its product coverage into the ASEAN region and additionally to the global markets in 2006-2014. Today, KLBF’s products are available in all ASEAN countries (except Laos) and have also reached Nigeria. Even so, domestic sales still dominate 95% of its total sales. During 2005 – 2009, KLBF’srevenue grew at CAGR of 11,5%.
In terms of gross profit, pharmaceutical was still the biggest contributor in 1H10 (34%) due to its highest gross profit margin among the other 3 divisions. Excluding the distribution division, the nutrition division recorded the highest gross profit CAGR of 15,5% in 2005 – 2009.
Net profit was consistently growing with CAGR of 10% during 2005 – 2009. This achievement was inline with its constant revenue growth. Catalysts for KLBF’s future performance will come from the Government of Indonesia’s (GoI) regulation which will regulate the country’s health spending; Indonesian robust economic performance which will increase buying power; and M&A action to increase KLBF’s dominance in the fragmented Indonesian pharmaceutical industry.
Total KLBF 7,877 9,087 15.4% 3,804 4,512 18.6% 48.3% 49.7%
0%
25%
50%
75%
2005 2006 2007 2008 2009 1H10
Prescription Consumer HealthNutritional Distribution
32% 32% 34% 30% 31% 34%
41% 37% 33%23% 21% 21%
21% 25% 27%23% 23% 20%
6% 6% 6%24% 25% 25%
0%
25%
50%
75%
100%
2005 2006 2007 2008 2009 1H10
Prescription Consumer Health Nutrit ional Distribution
Segmental Contribution to Gross Profit Gross Profit Margin per segment
Source : Company Source : Company
1 October 2010
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KLBF Gross Profit VS Exchange Rate KLBF Revenue (In IDR bio)
Source : Company
Robust prospect on Indonesian Economy outlook
Indonesia’s growing economy brought direct benefits to the Indonesian consumer sector. Presently, the consumer sector has outperformed the Jakarta Composite Index (JCI) by 38% (JCI increased 36,1% YTD, Jak Consumer increased 74,7% YTD). This performance was supported by a low inflation rate of 2,78% in 2009 and 4,82% as of August 2010. In addition, Indonesia’s robust GDP growth has been consistently above 5% for the last 5 years, except for 2009. Recent data shows that Indonesian GDP in 1H 2010 achieved 6,2% y-o-y.
Indonesia’s GDP per capita has doubled from USD1,188 per capita in 2004 to 2,224 USD per capita in 2009. With the Indonesian economy still having strong growth prospects going forward (estimated GDP growth of 5.5% in 2010), we can expect consumers to have more buying power. Such conditions will positively impact consumer players such as KLBF.
Furthermore, the good economic environment has made the Rupiah currency relatively strong to US Dollar, which has also helped KLBF improve its performance. Since 90% of KLBF’s raw materials are imported, the strong Rupiah will benefit the company.
Inflation VS Composite index figures Indonesia GDP per Capita
Source : Company Source : Company
40%
45%
50%
55%
Q10
7
Q20
7
Q30
7
Q40
7
Q10
8
Q20
8
Q30
8
Q40
8
Q10
9
Q20
9
Q30
9
Q40
9
Q11
0
Q21
0
8,000
9,000
10,000
11,000
12,000
Gross Margin (LHS) USD/IDR Exchange Rates (RHS)
0
5
10
15
Dec-06 Dec-07 Dec-08 Dec-090
500
1000
1500
2000
2500
3000
3500
Inflation (LHS) JCI (RHS)
Source : Company
0
1000
2000
3000
4000
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-100
500
1000
1500
2000
2500
3000
JCI (LHS) KLBF (RHS) Consumer (RHS)
1,000
1,500
2,000
2,500
Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-092.0%
4.0%
6.0%
8.0%
GDP Per Capita (USD) GDP growth
1,3491,457
1,806 1,884
2,214
1,0791,256
955 1,0031,195 1,149
1,403
705825
-
500
1,000
1,500
2,000
2,500
2005 2006 2007 2008 2009 1H09 1H1055%
65%
75%
Revenue Gross Profit Profit Margin
1 October 2010
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Prescription division: The Indonesian pharmaceutical market is very fragmented, consisting of more than 200 pharmaceutical companies. Of those, KLBF is the market leader by owning 13% market share of the Rp19,2 trillion total market for ethical medicine products. During 2005 – 2009, the division has grown by a CAGR of 13% along with the high average gross profit margin of 66%. Given a robust Indonesian economic outlook, we expect for revenue to grow by 14% for 2011-2012.
KLBF’s prescription medicine products (a total of 372 prescription labels) are plotted under three categories: licensed products (82 labels), branded generic (249 labels), and unbranded generic products (41 labels). In 2009, branded generic products contributed to 61% of the total prescription segment.
Catalysts for this segment came from the Government of Indonesia’s (GoI) initiatives to approve the new healthcare law in 4Q09 which will give guidance to increase spending in the health care industry to 5% of total GDP. Government spending in the last 11 years (1996 – 2006) stood at 2,5% of GDP. In 2004, GoI has implemented the national social security system by executing a healthcare program for the poor through the Health Insurance for Poor Population program (Askesin) that was later replaced by the Public Health Insurance Scheme (Jamkesmas) program.
The Indonesian robust economy also has an impact in stronger purchasing power and wider health insurance coverage, which will ultimately shift customer preference from consuming OTC medicine to consulting doctors and having prescription medication. in This case will benefit KLBF since prescription medication brings the highest profit margin among other products.
KLBF’s strategy to be the first company to acquire the expired medicine patent has benefited KLBF since it can spend less than 1% of its sales annually for R&D. At the same time, the strategy enables KLBF to introduce new generic products earlier than other pharmaceutical players in Indonesia, thus allowing it to enjoy a relatively higher margin on that new generic drug.Prescription Division Revenue VS Gross Profit Revenue contribution for Prescription Division
Source : Company
Source : Company
Licensed Products
32%
Generic7%
Branded Generic
61%
Source : Company
Sanbe, 6%
Dexa Medica, 7%
Pfizer, 4%
Sanofi Aventis, 4%
Interbat, 4%
Farenheit, 3%
Others, 59%
Kalbe, 14%
KLBF Market Share for Prescription medicine Revenue contribution from Each Division
Source : Company, IMS Health Prescription Pharmaceutical FY 2009 Source : Company
1,000
2,000
3,000
4,000
2005 2006 2007 2008 2009
Prescription Consumer HealthNutritional Distribution
1,9551,843 1,856
1,475
1,727
797 826
1,213 1,153 1,169
885 958
427 457
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500
1,000
1,500
2,000
2,500
2005 2006 2007 2008 2009 1H09 1H1040%
50%
60%
70%
Revenue Gross Profit Profit Margin
1 October 2010
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Consumer Health Revenue VS Gross Profit KLBF Key consumer Health Products as of Dec 09
Therapeutic Class Brand NameMarket Share by Volume
Consumer Health division: KLBF’s consumer health division consists of Over-the–Counter (OTC) products and energy drink products. Most of the target market for this segment is the middle-low income, which seeks for self-medication for their illnesses. During 2005 – 2009, the division’s revenue has grown by CAGR of -3,1% along with a declining gross profit margin mainly due to the fierce competition in the energy drink segment. Extra Joss alone contributes 30% of the division’s revenue. KLBF’s Extra Joss now comes in second by owning a market share of 31% in 2009, down from 38% in 2008. The market leader now is Kuku Bima with 36% market share.
In 2009, the division’s revenue and gross profit grew by 17,1% and 8,2% y-o-y, respectively, due to the better economic environment. Going forward, KLBF has a new strategy to improve its consumer health performance both in revenue and profit margin by introducing 7 new products with natural ingredients. The new products are Tipco Fruit Juice, Fatigon Hydro, Mensana, and new variants to KLBF’s current brands (Mixagrip Pegal Linu, Extra Joss new fruity flavor, Kids Entrostop, and Procold Promuno). We estimate that Extra Joss’ new flavor will help KLBF acquire more market share in the energy drink sector.
Tempo, 9% Soho, 9%
Pharos, 6%
Sanbe, 4%
Konimex, 4%
Darya Varia, 3%
Others, 50%
Kalbe, 14%
Extra Joss, 31%
Kuku Bima,36%
Kratingdaeng, 8%
M150, 5%
Others, 2%
Kalbe, 14%
KLBF Share for Consumer Health Market (Dec 09) KLBF Share for Energy Drink Market (Dec 09)
Source : Company, IMS Health Prescription Pharmaceutical FY 2009 Source : Company, Ac Nielsen FY 2009
1,0901,323
1,6001,728
1,936
8671,039
623768
961 8621,022
417629
-
500
1,000
1,500
2,000
2,500
2005 2006 2007 2008 2009 1H09 1H1030%
40%
50%
60%
70%
Revenue Gross Profit Profit Margin
1 October 2010
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Nutrition Division Revenue VS Gross Profit GDP VS Milk consumption per capita
Source : Company
Source : Company
Nutrition division: KLBF’s nutritional division has a complete product portfolio, spanning from milk for expecting and lactating mothers, babies, toddlers, children, adults, and special needs consumer groups. Most of the target market for this segment is the middle-high income. During 2005 – 2009, the division’s revenue has grown by CAGR of 15,5%, the fastest CAGR growth among the other 3 divisions. KLBF owns 8% market share of the Rp9,2 trilion nutritional market in 2009.
In 1H10, the division’s revenue and gross profit grew by 19,8% and 51% y-o-y, respectively, due to the better economic environment that has enabled consumers to spend more money on premium products. The higher price of imported skimmed milk, a main raw material for KLBF’s milk products, was offset by the strengthening Rupiah relative to the US Dollar, which contributed to a higher gross profit margin in 1H10.
Catalysts for this division comes from the robust Indonesian economic prospects which increases consumer buying power and KLBF’s strategy to boost its sales by implementing a “direct-to-consumer” marketing campaign such as placing nutrition specialists in stores to help customers better understand its nutrition products.
KLBF has also introduced a new nutrition product under the “Nutrican” brand to cater to the needs of cancer patients. Nutricanwas a new joint research product between Kalbe, Medicine Faculty University of Indonesia, and Dharmais Cancer Hospital.
KLBF Share for Nutrition Market (Dec 09) KLBF Key consumer Health Products as of Dec 09
Source : Company, Ac Nielsen FY 2009
Diabetasol 71% Milk for diabetic treatment
Prenagen 52.4% Milk for pregnant and lactating mother
Milna 68.0% Semi solid food for 6-24 months old baby
Morinaga BMT 9.2% Milk for 0-6 months baby
Morinaga Chil Mil 9.1% Milk for 1-3 years baby
Entrasol 5.6% Milk for dietary purpose
Morinaga Chil Kid 5.3% Milk for 1-3 years baby
Morinaga Chil School 1.8% Milk for older than 3 years toodlers
Market Share
Market SegmentBrand NameNutricia (Danone),
10%
Sari Husada (Danone), 16%
Frisian Flag, 11%
Nestle , 30%
Fonterra, 6%
Abbot, 4%
Wyeth, 5%
Mead Johnson, 4%
Nutrifood, 3%
Others, 3%
Kalbe, 14%
-
5,000
10,000
15,000
20,000
Vietnam Philipines Indonesia Thailand Malaysia SouthKorea
0
10
20
30
40
GDP Per capita (USD) Milk Per capita (kg)
Source : IMF, FAPRI (Food & Agricultural Policy) for whole milk powder, liquid milk, and non fat dry milk
3rd Party66%
Kalbe Farma34%
1,477 1,4521,742
2,790
3,211
1,474 1,586
171 178 227
9081,129
522 473
-
500
1,000
1,500
2,000
2,500
3,000
3,500
2005 2006 2007 2008 2009 1H09 1H1010%
20%
30%
40%
Revenue Gross Profit Profit Margin
1 October 2010
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Distribution Division Revenue VS Gross Profit Main 3rd Party Principals based on Category
Source : Company Source : Company
Distribution and Packaging division: The division consists of two public companies:
1. Enseval Putera Megatrading (EPMT) focuses on distribution and logistics with KLBF owning an 83,75% stake. In 1H10, 72% of EPMT’s revenue came from KLBF for the distribution of its products.
2. Kageo Igar Jaya (IGAR) focuses on packaging with KLBF owning a 68,04% stake. In 1H10, 34% of IGAR revenue came from KLBF.
In 1H10, this division booked revenue of Rp1,58 trillion, growing by 7,6% y-o-y. However, gross profit margin decreased to 29,8% from 35,4% due to the Rupiah strengthening relative to USD.
Most of the distribution division’s revenue is generated through the distribution of KLBF’s products. As an independent company, EPMT also generates revenue through selling and distributing other companies’ principal products. EPMT receives a certain percentage in fees, and thus the profit margin is limited. Revenue of the distribution division is highly dependant on the performance of other divisions and principals in terms of the quantity of the products sold. If the fee is received in a foreigncurrency, then the fluctuation of that foreign exchange to the Indonesian Rupiah will performance as well.
In August 2010, KLBF sold 58,1% of its ownership in IGAR for Rp112 billion at Rp185 per share due to its low profitability. IGAR has a 7% EBIT margin in 1H10 compared to KLBF with an EBIT margin of 17,8%. Furthermore, the management’s decision to sell its ownership is also due to the fact that the packaging division requires a relatively high Capex to produce the latest up-to-date packaging design for its product. The impact of this action on KLBF’s balance sheet will be minimal as IGAR’stotal revenue and net profit in 1H10 was Rp284,67 billion and Rp13 billion, respectively, or 4% of KLBF’s consolidated revenue and 3% of consolidated net profit.
Distribution Sales 1H10 Packaging Sales 1H10 Revenue Breakdown for Distribution Only 1H10
Source : Company
Distribution & Logistic87%
Chemical Raw Material
8%
Medical Instruments
5%
Source : EPMT 1H10 Unauditted Financial Statement
Kalbe Farma72%
Principals28%
1 October 2010
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Financial Performance:
During 2005 – 2009, KLBF’s revenue grew at a CAGR of 11,5%. For FY10, we estimate net sales to grow 12,3% y-o-y. Most of the revenue growth will come from prescription growth of 14% y-o-y and nutritional growth of 18%y-o-y on the back of the Government of Indonesia’s (GoI) initiatives. The GOI plans to increase Indonesia’s spending on health and implement a social safety net plan through the introduction of the Public Health Insurance Scheme (Jamkesmas) program for the poor. Thus, we estimate that more people will consult doctors to cure their illnesses and have prescription medication rather than just consuming OTC products.
Given Indonesia’s bullish economic environment that will increase consumer purchasing power, we estimate that more people can afford to consume more milk to feed their children and maintain their health.
The 1H10 financial report shows that the prescription and nutrition sectors post promising growth figures, while the consumer health sector only grew by 4% y-o-y due to the fierce competition in energy drink products. We estimate that the customer health division will start to grow its revenue in 2H10 and FY11 on the back of KLBF’s seven new variant products using natural ingredients. In the energy drink segment, KLBF launched a new flavor for Extra Joss in order to differentiate its product from the nearest competitors and grab back its market share.
We estimate for KLBF’s blended profit margin to increase in 2010 from 49,7% in 2009 into 50,9% in 2010, mainly coming from an improvement in nutritional’s gross profit margin. The unaudited results for 1H10 show that the nutrition division was able to boost its profit margin significantly from 48% in 1H09 to 61% in 1H10.
In the prescription division, 68% of KLBF’s revenue comes from generic products, 61% from branded products, and 7% from non-branded generic products. Given the nature of generic products as well as the health ministry’s decree no 146/2010 on 27 January 2010 regulating the upper price cap for 453 labels of generic products, we will see limited room for the prescription division to improve its margin. Thus, we estimate for growth to come from volume.
Batavia Stock FocusBUY, with target price of Rp3.000
Based on the discounted free cash flow valuation model, our target price for KLBF is Rp3.000, with an assumed WACC of 12,8% and a terminal growth rate of 5%. At our target price, KLBF will be trading at 23,3X FY10 PE and 19,6X FY11 PE. In our view, KLBF will post another bright performance in the next quarter coming from the stable to strong Rupiah currency, the performance of new products launched in consumer health segments, and a bright outlook on the dairy industry. Hence, we recommend a BUY on KLBF.
Furthermore, KLBF’s dividend policy for the coming years can be a sweetener for investors as KLBF is targeting a payout ratio of 25% in FY10, 30% in FY11, and 35% in FY 120. Based on our estimate, KLBF dividend yield stands at 1% for 2010 and 1,5% for 2011.
Rolling P/E Rolling P/BV
Source : BloombergSource : Bloomberg
1%
19%17%
21%
25%
30%
35%
0%
10%
20%
30%
40%
2006 2007 2008 2009 2010E 2011E 2012E
KLBF Dividend Policy P/E Jakarta Consumer Index vs P/E KLBF
Source : BloombergSource : Company
DCF Valuation (In Rp bn)2009 2010 2011 2012 2013 2014 2015
EBIT 1,566 1,876 2,209 2,602 3,098 3,688 4,389(+) Depreciation & Amortisation 159 182 194 208 223 238 255(-) Tax (421) (506) (602) (715) (858) (1,028) (1,231)(-) Capex (230) (280) (299) (320) (343) (367) (392)(+/-) Changes in WC (78) (82) (239) (273) (344) (457) (357)Free Cash Flow (Rp billion) 996 1,189 1,264 1,502 1,776 2,075 2,664PV of Free Cash Flow (Rp billion) 1,121 1,181 1,238 1,283 1,460Total PV of FCF (Rp billion) 6,284 Terminal Value (Rp billion) 35,968.4 PV of Terminal Value 19,717 Minority interest 637.5 Net cash 2,867 Total value (Rp billion) 28,230 Shares Outstanding (mn shares) 9,375 Value Per Share (Rp) 3,011 (Rounded to Rp 3.000)
Cash Flow(in Bio IDR) 2007A 2008A 2009A 2010F 2011FNet Income 706 707 929 1,211 1,440Add depreciation 136 156 159 182 194Changes in account receivables -167 -74 -317 26 -187Changes in inventory -542 -179 45 -229 -261Change in advances, prepaid tax & expe 99 113 186 95 109Changes in other assets 230 16 -195 0 0Changes in account payables -11 24 203 25 100Changes in working capital -391 -100 -78 -82 -239Others -88 45 354 0 0CFO 363 808 1,364 1,310 1,396Proceed from treasury stock -218 -351 -119 689 0Increase in other investing activities - ne -35 7 9 6 6Capex -316 -279 -230 -280 -299Others 527 437 -306 0 0CFI -42 -186 -645 415 -293Changes in debt -25 -9 -259 0 0Short term borrowing 12 102 193 -339 0Equity issuance 0 0 0 0 0Dividend cash -126 -123 -152 -279 -424Adjustment -421 -473 73 -1 0Others 86 64 -247 198 187CFF -474 -440 -391 -421 -237
DISCLAIMER The information contained in this report has been taken from sources we deem reliable, however, PT. Batavia Prosperindo Sekuritas or its affiliates, cannotguarantee its accuracy and completeness. The views expressed in this report accurately reflect personal views of the analyst(s) about the subject securities or issuers and no part of the compensation ofthe analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations and/or views in this report. Nothing in this reportconstitutes a representation that any investment strategy or recommendation contained herein is suitable or appropriate to a recipient’s individual circumstances.This report is published solely for information purposes and should not be considered as a solicitation or an offer to buy or sell any securities. Neither PT. Batavia Prosperindo Sekuritas nor any of its affiliates and/or employees accepts any liability for any direct or consequential losses arising from any useof this publication. Copyright and database rights protection exists in this publication and it may not be reproduced, distributed and/or published by any personfor any purpose without prior consent of PT. Batavia Prosperindo Sekuritas. All rights are reserved.
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Batavia Prosperindo Sekuritas Investment Ratings: BUY – expected total return of 10% or more; HOLD – expected total return of -10% to 10%; SELL – expected total return of -10% or more. Expected total return is defined as 12-month total return (including dividends).
