Kino Indonesia (KINO IJ)

Transcription

1 Equity Research Result note Monday,02 April 2018 HOLD MAINTAIN Last price (IDR) 1,970 Target Price (IDR) 2,100 Upside/Downside +6.6% Previous Target Price (IDR) 2,100 Stock Statistics Sector Bloomberg Ticker CONSUMER KINO IJ No of Shrs (mn) 1,429 Mkt. Cap (IDRbn/USDmn) 2,814/204 Avg. daily T/O (IDRbn/USDmn) 0.3/0.0 Major shareholders (%) PT KINO INVESTINDO 69.5 DBSSG S/A NUSANTARA FMCG LIMITED 10.7 Estimated free float 19.8 KINO relative to JCI Index Source : Bloomberg Kino Indonesia (KINO IJ) Depressed net profits, as expected KINO booked 4Q17 earnings of IDR42bn (down 7% qoq) yet higher than in 4Q16. In 4Q17, KINO maintained its high gross margin. Nonetheless, higher opex led to a lower FY17 net margin of 3.5% (FY16: 5.2%) with FY17 net profits of IDR110bn (-39% yoy). The FY17 net profit figure is 96% of our forecast, i.e. in line. Flattish 4Q17 top line. KINO reported 4Q17 revenues of IDR815bn, flattish yoy (+2.9%) but down 11.5% qoq. By division, the personal care and beverages divisions saw higher revenues: up by 7% and 23% yoy, respectively. Consequently, the FY17 top line reached IDR3.2tn, still down 9.5% yoy, yet in line with our forecast (97%). On a yearly basis, all divisions reported negative revenues growth except for beverages (+5% yoy). FY17 net profits down by 39% yoy. In 4Q17, KINO maintained its high gross margin of 42.7% (4Q16: 38.1%), thanks to the robust gross margins in the personal care (58%) and food (7.1%) divisions, while the gross margin for beverages was maintained at 34.2%. From past meetings, we learnt that better efficiencies helped the company to maintain a high GPM. KINO reported higher 4Q17 opex probably arising from the preparations for new product launches, resulting in a lower 4Q17 operating margin of 6.9% (3Q17: 8.9%). As a result, the FY17 operating margin was lower at 5.9% (FY16: 6.8%). In turn, this filtered through to a lower FY17 net margin of 3.5%. In 2017, KINO booked FY17 net profits of IDR110bn (down 39% yoy), yet achieving 96% of our forecast, i.e. in line. Improved 4Q17 inventory and receivable days. In 2Q17, the company revamped its distribution channels, seeking efficiency improvements at its distribution subsidiary, especially in the warehousing and inventory system. In 4Q17, the inventory days reached 74 days with maintained receivable days of 91 days. This is an improvement compared to previous quarters. As a result, the 4Q17 cash conversion cycle improved to 85 days its lowest level in the past 8 quarters. Nonetheless, the company still reported longer FY17 inventory and receivable days of 77 and 95 days compared to 72 and 90 days in FY16, respectively. Maintain HOLD. We will revisit our model following the release of the FY17 result. At the current share price, KINO is trading at FY18F PE of 20.5x, still lower than its consumer peers. In our view, the company s ability to conduct product innovation coupled with the revamping of its distribution and better efficiencies should translate into solid earnings growth in the future. HOLD maintained. Key Financials Year to 31 Dec 2015A 2016A 2017F 2018F 2019F Revenue (IDRbn) 3,604 3,493 3,246 3,402 3,566 x EBITDA (IDRbn) Natalia Sutanto EBITDA Growth (%) (41.7) (10.4) (62-21) ext.3508 Net profit (IDRbn) natalia.sutanto@danareksa.com EPS (IDR) 1, EPS growth (%) (99.9) (90.8) (36.4) BVPS (IDR) 9, , , , ,585.3 DPS (IDR) PER (x) PBV (x) Dividend yield (%) EV/EBITDA (x) See important disclosure at the back of this report 1 Source : KINO, Danareksa Estimates

2 Exhibit 1. REVENUE AND GROWTH Exhibit 2. NET PROFIT AND GROWTH Exhibit 3. MARGINS Exhibit 4. GEARING LEVEL Exhibit 5. FY17 results Financial performance 4Q16 3Q17 4Q17 yoy qoq FY16 FY17 yoy 2017F A/F, % Revenue, IDRbn % -11.5% 3,493 3, % 3,246 97% COGS % -10.6% 2,089 1, % 1,882 Gross profit % -12.7% 1,404 1, % 1,364 Opex % -8.0% 1,165 1, % 1,156 Operating profit Na -31.0% % % Pretax profit (7) Na -23.4% % 148 Net profit (4) Na -7.0% % % Gross margin 38.1% 43.3% 42.7% 40.2% 42.1% 42.0% Opex to revenue 38.1% 34.4% 35.8% 33.4% 36.2% 35.6% Operating margin 0.0% 8.9% 6.9% 6.8% 5.9% 6.4% Pretax margin -0.9% 6.9% 6.0% 6.3% 4.5% 4.5% Net margin -0.5% 4.9% 5.2% 5.2% 3.5% 3.5% Inventory days Receivable days Payable days See important disclosure at the back of this report 2

3 See important disclosure at the back of this report 3

4 Exhibit 6. Income Statement Revenue 3,604 3,493 3,246 3,402 3,566 COGS (2,135) (2,089) (1,882) (1,968) (2,064) Gross profit 1,468 1,404 1,364 1,434 1,501 EBITDA Oper. profit Interest income Interest expense (89) (90) (75) (72) (75) Forex Gain/(Loss) (9) Income From Assoc. Co s (11) Other Income (Expenses) 8 38 (2) (2) (3) Pre-tax profit Income tax (74) (38) (32) (41) (46) Minority interest Net profit Core Net Profit Exhibit 7. Balance Sheet Cash & cash equivalent Receivables Inventory Other Curr. Asset Fixed assets - Net 1,007 1,222 1,271 1,337 1,404 Other non-curr.asset Total asset 3,211 3,284 3,264 3,441 3,592 ST Debt Payables Other Curr. Liabilities Long Term Debt Other LT. Liabilities Total Liabilities 1,435 1,332 1,231 1,285 1,302 Shareholder'sFunds 1,775 1,929 2,008 2,130 2,265 Minority interests Total Equity & Liabilities 3,211 3,284 3,264 3,441 3,592 See important disclosure at the back of this report 4

5 Exhibit 8.Cash Flow Net income Depreciation and Amort Change in Working Capital (463) (129) (25) OtherOper. Cash Flow Operating Cash Flow (12) Capex (165) (246) (81) (102) (107) Others Inv. Cash Flow (116) (50) Investing Cash Flow (281) (296) (75) (90) (87) Net change in debt 135 (14) (123) 67 (3) New Capital Dividend payment 0 (53) (36) (23) (29) Other Fin. Cash Flow (89) (90) (75) (72) (75) Financing Cash Flow 892 (114) (234) (28) (107) Net Change in Cash 599 (302) Cash - begin of the year Cash - end of the year Exhibit 9. Key Ratios Year to 31 Dec 2015A 2016A 2017F 2018F 2019F Growth (%) Sales 7.9 (3.1) (7.1) EBITDA (41.7) (10.4) Operating profit (44.9) (12.9) Net profit (31.2) (36.4) Profitability (%) Gross margin EBITDA margin Operating margin Net margin ROAA ROAE Leverage Net Gearing (x) Interest Coverage (x) Source : KINO, Danareksa Estimates See important disclosure at the back of this report 5