FOCUS Wismilak Company Update 11 November 2014

Transcription

1 FOCUS XXX Company Update XX XXXXX 213 FOCUS Wismilak Mandiri Sekuritas Analyst Herman Koeswanto, CFA Sector : Consumers BUY (from NEUTRAL) Current Price Rp535 Price Target Rp84 (+57.%) Prev. TP:Rp74 52-wk range Rp86 - Rp51 Stock Data Bloomberg Code WIIM IJ Mkt.Cap (Rp bn/us$ mn) 1,124 / 92 Issued Shares (mn) 2,1 Avg. Daily T/O (Rp bn/us$ mn).7/.1 Major shareholder Central Tower Capital Pte Ltd 22.5% Walla Family 19.4% Others 58.1% EPS consensus Mansek Cons Diff 214F (19.5) 215F F Share price performance 3m 6m 12m Absolute (%) (2.7) (23.) (29.6) Relative to JCI (%).2 (24.4) (41.4) Climbing through the Storm We think most of the negative on Wismilak (WIIM) is already priced in. We view WIIM at this current price looks attractive as the only consumer stock trading at single digit FY15F P/E of 7.6x, 7% discount to peers average. Being a 2 nd tier player, WIIM will benefit from stronger profitability in FY15F-16F. We upgrade our rating to Buy from Neutral with higher TP of Rp84/share implying 57% upside potential and conservatively justified at implied 12x P/E15F. Improving 3Q14 numbers. WIIM booked 3Q14 NPAT of Rp27bn (-16%YoY, +53.8%QoQ) which improved significantly vs 2Q14 underpinned by stronger 3Q14 sales of Rp451bn, which is up 16.7%YoY and 18.8%QoQ. 9M14 NPAT was Rp8bn (-28%YoY) below consensus yet we believe is well expected. We have seen margin improvement in 3Q14 both at gross and EBIT level by 4.4ppt and 1.7ppt up to 29.9% and 8.8% respectively. Strong volume sales growth from SKMregular and SKT segment. WIIM booked stronger 3Q14 sales up to Rp451bn (+16.6%YoY, +18.8%QoQ), mostly driven from machine-rolled (SKM) regular product under Wismilak Diplomat brand and hand-rolled (SKT) product under Wismilak Kretek. During 3Q14 SKM-regular booked 16%YoY and 25%QoQ volume growth followed by the SKT segment which booked 28%YoY and 2%QoQ volume growth. Diplomat Mild sales volume has showed improvement gradually up by 7%QoQ. Further improvement in 4Q14. Based on our discussion with the Company, we expect WIIM likely to record 4Q14 NPAT of Rp28-3bn, implying 3-4%YoY growth or 6-11%QoQ growth mainly supported by strong 4Q14 sales up to Rp468bn, up 18.4%YoY and up 3.8%QoQ. FINANCIAL SUMMARY What s next? WIIM has discontinued Fun Mild brand that was just launched in 2Q14 due to weak demand. Currently the Company would focus to increase the Diplomat Mild market penetration into the Sumatera market and consider another potential new product launch next year. Given slower volume growth this year, WIIM has lost its market share and now we expect WIIM may enter tier 1 by 217 or 218. The perks of being a 2 nd tier player. As a 2 nd tier player WIIM would see a FY15 blended excise hike of 7%, much lower than 11% on tier 1. To offset the cost increase WIIM needs to raise ASP by only 4-5% or 5-6% to maintain margin. We think this could be the catalyst for WIIM to regain its market share. Despite of lower sales volume, we upgrade our FY15F- 16F NPAT by 56% and 45% up to Rp148bn and Rp195bn mostly thanks to lower excise tax and stronger profitability. Upgrade to Buy with higher TP of Rp84, implying 57% upside potential and 12.x FY15F P/E which is conservatively justified at 5% discount to average peers valuation considering its liquidity risk. At this current price, WIIM looks attractive as the only consumer stock trading at single digit valuation of 7.7x P/E15F with FY14F-16F EPS growth of 37% CAGR. YE Dec (Rp Bn) 212A 213A 214F 215F 216F EBITDA Net Profit Fully-diluted EPS (Rp) Fully-diluted EPS growth (%) (4.3) 71.1 (22.) P/E Ratio (x) EV/EBITDA (x) P/B Ratio (x) Dividend Yield (%) ROAE (%) Source: Company ( ), Mandiri Sekuritas ( ) Please see important disclosure at the back of this report Page 1 of 6

2 FIGURE 1. SALES BREAKDOWN WIIM - At a Glance FIGURE 2. GROSS PROFIT BREAKDOWN Filter and OPP 5% Printing/ others 3% Filter and OPP 3% Printing/ others % Cigarettes 92% Cigarettes 97% FIGURE 3. INDUSTRY MARKET SHARES FIGURE 4. PROFITABILITY COMPARISONS VERSUS PEERS FIGURE 5. EPS GROWTH TREND FIGURE 6. LEVERAGE TREND (Rp) (%) (5) (1) (%) (1) (2) (x) Dec-9 Dec-1 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-9 Dec-1 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 EPS EPS Gr. [RHS] Net Debt/Equity (NDE) Interest Cover [RHS] Please see important disclosure at the back of this report Page 2 of 6

3 FIGURE 7. AVERAGE MACHINE-ROLLED (SKM) WEEKLY SALES IN QUARTERLY BASIS Stick/week 6, 5, 4, 3, 2, 1, 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 FIGURE 8. AVERAGE HAND-ROLLED (SKT) WEEKLY SALES IN QUARTERLY BASIS Stick/week 14, 12, 1, 8, 6, 4, 2, 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 FIGURE 9. SKM WEEKLY SALES TREND PER KEY BRAND in mn sticks DM16 GM16 WD12 WD16 FIGURE 1. SKT WEEKLY SALES TREND PER KEY BRAND in mn sticks GK WK FIGURE 11. WIIM S 3Q14 SALES STRONGLY RECOVERED FIGURE 12. WIIM S 3Q14 MARGIN HAS RECOVERED Rpbn 4.% % 8.% 6.% 4.% 2.%.% 2.% 35.% 3.% 25.% 2.% 15.% 1.% 5.%.% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 Sales %YoY (RHS) Gross Margin EBITDA Margin Please see important disclosure at the back of this report Page 3 of 6

4 FIGURE 13. WIIM S KEY ASSUMPTIONS AND EARNINGS FORECAST CHANGES 214F 215F 216F New Old % change New Old % change New Old % change Revenue 1,652 2, % 1, % 2, % Gross profit % % % EBIT % % % Net profit % % % Gross margin 31.6% 27.6% 32.5% 22.9% 33.6% 25.7% EBIT margin 9.5% 9.4% 11.5% 6.8% 13.1% 8.4% Net margin 6.2% 7.3% 7.6% 3.6% 8.6% 4.2% Sales volume 2,96 2, % 2,275 3, % 2,485 3, % SKM 1,446 2, % 1,56 2, % 1, % SKT % % % Sales volume growth (%YoY) SKM 32.3% 2.7% 7.9% 11.2% 8.9% 1.5% SKT 5.1% 5.1% 1.% 15.% 1.% 1.% ASP increase (%YoY) SKM 8.2% 12.4% 5.9% 9.7% 4.3% SKT 6.% 1.5% 6.% 8.3% 5.% Excise rate hike (%YoY) SKM 1% 1% 8% 1% 8% 1% SKT 1% 1% 7% 1% 7% 1%, Bloomberg consensus FIGURE 14. WIIM S 9M14 RESULTS WIIM 9M14 Results Rp bn 9M14 9M13 %YoY 3Q14 3Q13 %YoY 2Q14 %QoQ FY14 Cons. % of Cons. FY14F Mansek % of Mansek Revenue 1,185 1,193 1% % % 2,8 59.% 2, % COGS (843) (844) % (316) (257) 23% (283) 11.9% (1,438) 58.6% (1,53) 56.1% Gross profit % % % 57 6.% % Opex (23) (199) 16% (95) (83) 15% (7) 35.9% (398) 57.8% (429) 53.5% EBIT % % % % % NPAT % % % % % Gross margin 28.8% 29.2% 29.9% 33.5% 25.5% 28.4% 29.5% EBIT margin 9.5% 12.6% 8.8% 12.1% 7.% 8.6% 9.4% Net margin 6.8% 9.3% 5.9% 8.2% 4.6% 6.2% 6.5% Source: Company, Mandiri Sekuritas, Bloomberg, Bloomberg consensus Please see important disclosure at the back of this report Page 4 of 6

5 Wismilak Profit & Loss YE Dec (Rp Bn) 212A 213A 214F 215F 216F Revenue 1,119 1,588 1,652 1,951 2,281 Gross Profit Oper. Profit EBITDA Net Interest (24) (4) (15) (25) (39) Interest Expense (25) (14) (2) (33) (46) Interest Income Forex Losses/Gains (1) (4) Net Other 16 2 (4) (2) Pre-Tax Profit Income Tax (28) (43) (34) (5) (65) Others Minority Interests Net Profit Cash Flow YE Dec (Rp Bn) 212A 213A 214F 215F 216F Operating Profit Net Interest (24) (4) (15) (25) (39) Depr & Amort (1) Other expenses/income 16 2 (4) (4) (2) Other Gain / Loss Tax (28) (43) (34) (5) (65) Chg in Working Capital (67) (214) 119 (87) 19 Other Oper. Cash Flow 3 32 (42) 14 (1) Oper. Cash Flow 13 (18) Capital Expenditure 2 (134) (84) (74) (79) FCF (OPCF after Capex) 15 (152) Other Investing CF (1) (12) 14 CF From Investing 1 (146) (71) (74) (79) Net Chg in Debts 11 (119) 63 (1) 7 Equity Funds Raised 367 Dividend (72) (4) (31) (45) (59) Other Financing CF 2 82 (72) 3 (6) CF From Financing 38 (77) (4) (51) 6 Non-Recur. Inc (Exp) (1) (4) Extraord. Inc(Exp) Net Change in Cash 321 (246) 88 (39) 15 Cash at beginning Cash at End Valuation YE Dec 212A 213A 214F 215F 216F Balance Sheet YE Dec (Rp Bn) 212A 213A 214F 215F 216F Cash & ST Investment Acct. Receivable Inventory Others Current Assets 1, ,14 1,15 1,311 Investments Fixed Assets Others Total Assets 1,27 1,229 1,345 1,548 1,776 Curr. Liabilities Acct. Payable ST Borrowings Others Long-Term Liabilities Long-Term Payable Others Total Liabilities Shareholder s Equity ,62 Key Ratios YE Dec 212A 213A 214F 215F 216F Growth (% YoY) Sales EBIT (13.) EBITDA (15.9) Net Profit (4.3) 71.1 (22.) Profitability (%) Gross Profit Margin Oper. Margin EBITDA Margin Net Margin ROAA ROAE Leverage Net Debt / Equity (%) (14.6) (4.3) EBITDA/Gross Int. (x) Per Share Data (Rp) EPS CFPS 6 (9) BVPS DPS PER (x) EV/EBITDA (x) P/BV (x) P/CF (x) 84.3 (61.1) Dividend Yield (%) Please see important disclosure at the back of this report Page 5 of 6

6 Mandiri Sekuritas A subsidiary of PT Bank Mandiri (Persero) Tbk Plaza Mandiri 28 th Floor, Jl. Jend. Gatot Subroto Kav , Jakarta 1219, Indonesia General: , Fax : (Equity Research), (Equity Sales) RESEARCH John Rachmat Head of Equity Research, Strategy john.rachmat@mandirisek.co.id Tjandra Lienandjaja Banking tjandra.lienandjaja@mandirisek.co.id Handoko Wijoyo Construction, Toll Road handoko.wijoyo@mandirisek.co.id Hariyanto Wijaya, CFA, CFP, CPA Plantation, Heavy eq., Energy hariyanto.wijaya@mandirisek.co.id Herman Koeswanto, CFA Consumer, Poultry herman.koeswanto@mandirisek.co.id Liliana S Bambang Property, Building Material liliana.bambang@mandirisek.co.id Ariyanto Kurniawan Telecom, Coal & Metal Mining ariyanto.kurniawan@mandirisek.co.id Matthew Wibowo Retail matthew.wibowo@mandirisek.co.id Rizky Hidayat Property, Media rizky.hidayat@mandirisek.co.id Vanessa Ariati Tanuwijaya Banking, Health Care vanessa.tanuwijaya@mandirisek.co.id Aldian Taloputra Economist aldian.taloputra@mandirisek.co.id Leo Putra Rinaldy Economist leo.rinaldy@mandirisek.co.id Aditya Sastrawinata Research Assistant aditya.sastrawinata@mandirisek.co.id Wisnu Trihatmojo Research Assistant wisnu.trihatmojo@mandirisek.co.id Yudha Gautama Research Assistant yudha.gautama@mandirisek.co.id INSTITUTIONAL SALES Lokman Lie Co-Head Institutional Equities lokman.lie@mandirisek.co.id Silva Halim Co-Head Institutional Equities silva.halim@mandirisek.co.id Andrew Handaya Institutional Sales andrew.handaya@mandirisek.co.id Cindy Amelia P. Kalangie Institutional Sales cindy.amelia@mandirisek.co.id Jane Theodoven Sukardi Institutional Sales jane.sukardi@mandirisek.co.id Janefer Amanda Soelaiman Institutional Sales janefer.soelaiman@mandirisek.co.id Karmia Tandjung-Nasution Institutional Sales karmia.tandjung@mandirisek.co.id Mirna Santikara Salim Institutional Sales santikara.salim@mandirisek.co.id Oos Rosadi Institutional Sales oos.rosadi@mandirisek.co.id Vera Ongyono Institutional Sales vera.ongyono@mandirisek.co.id Yohan Setio, CFA Institutional Sales yohan.setio@mandirisek.co.id Zahra Aldila Niode Institutional Sales zahra.niode@mandirisek.co.id Kusnadi Widjaja Equity Dealing kusnadi.widjaja@mandirisek.co.id Edwin Pradana Setiadi Equity Dealing edwin.setiadi@mandirisek.co.id RETAIL SALES Ridwan Pranata Head Retail Equities ridwan.pranata@mandirisek.co.id Boy Triyono Jakarta Branch boy.triyono@mandirisek.co.id Yohanes Triyanto Kelapa Gading Branch yohanes.triyanto@mandirisek.co.id Hendra Riady Mangga Dua Branch hendra.riady@mandirisek.co.id Umar Abdullah Pondok Indah Branch umar.abdullah@mandirisek.co.id Indra Mas ari Bandung Branch indra.mas ari@mandirisek.co.id Yuri Ariadi Pontianak Branch yuri.ariadi@mandirisek.co.id Ruwie Medan Branch ruwie@mandirisek.co.id INVESTMENT RATINGS: Indicators of expected total return (price appreciation plus dividend yield) within the 12-month period from the date of the last published report, are: Buy (1% or higher), Neutral (-1% to1%) and Sell (-1% or lower). DISCLAIMER: This report is issued by PT. Mandiri Sekuritas, a member of the Indonesia Stock Exchanges (IDX). Although the contents of this document may represent the opinion of PT. Mandiri Sekuritas, deriving its judgement from materials and sources believed to be reliable, PT. Mandiri Sekuritas or any other company in the Mandiri Group cannot guarantee its accuracy and completeness. PT. Mandiri Sekuritas or any other company in the Mandiri Group may be involved in transactions contrary to any opinion herein to make markets, or have positions in the securities recommended herein. PT. Mandiri Sekuritas or any other company in the Mandiri Group may seek or will seek investment banking or other business relationships with the companies in this report. For further information please contact our number or fax ANALYSTS CERTIFICATION: Each contributor to this report hereby certifies that all the views expressed accurately reflect his or her views about the companies, securities and all pertinent variables. It is also certified that the views and recommendations contained in this report are not and will not be influenced by any part or all of his or her compensation.