MAYORA INDAH (MYOR IJ)

Transcription

1 Equity Research Company Update Tuesday,15 August 2017 HOLD UPGRADE Last price (IDR) 1,895 Target Price (IDR) 1,960 Upside/Downside 3.4% Previous Target Price (IDR) 1,790 Stock Statistics Sector Bloomberg Ticker CONSUMER MYOR IJ No of Shrs (mn) 22,359 Mkt. Cap (IDR bn/usdmn) 45,612/3,420 Avg. daily T/O (IDR bn/usdmn) 3.6/0.3 Major shareholders UNITA BRANINDO PT 32.9% NORGES BANK 1.1% Estimated free float (%) 67% EPS Consensus(IDR) 2017F 2018F Danareksa Consensus Danareksa/Cons (5.8) (10.2) MAYORA INDAH (MYOR IJ) Better performance on the cards We expect better performance from Mayora in 2H17, supported by growing exports and benign raw material prices. This, in turn, should lead to wider gross margins in the second half of the year. We roll over our valuation to 2018 and arrive at a higher TP of IDR1,960. With upside to our TP of less than 10%, we upgrade our recommendation to HOLD. Better performance expected in 2H17. Following the release of the 2Q17 result and the company s announcement that revenues were up by 8.4% yoy in 7M17, we maintain our FY17F top line growth estimate of 11% yoy underpinned by growing exports. Profitability-wise, we trim our gross margin estimate to 24%. Note that while the 1H17 gross margin slipped to 22.5%, we expect it to improve in 2H17, boosted by the persistently soft prices of raw materials such as sugar. Also on a positive note, we foresee better operating performance from more effective A&P. Consequently, the operating margin should be maintained at 11%. This, in turn, will filter down to the bottom line. In FY17F, we expect flat net profits of IDR1.38tn with a slightly higher net margin of 6.8%. New factories in 2018 to meet growing demand. As the only consumer company in Indonesia with significant export revenues, MYOR is well placed to benefit from the improving economic growth in most Asian countries. To meet the growing demand, MYOR is building new biscuit and coffee factories. These are expected to start operating in March 2018 boosting capacity by 20%. Strong export sales should help to make up for the sluggish growth in the domestic market which has been hit by depressed purchasing power so far this year Upgrade to HOLD with a higher TP. We continue to like MYOR given its solid fundamentals, growing export revenues and continued innovations which have helped the company to maintain market share. Nonetheless, the tepid 1H17 performance prompted the company s management to lower its bottom line guidance (flattish growth is now expected for 2017). Given this backdrop, we believe the stock has limited upside, especially since its peers are expected to show better performance. We roll over our valuation to 2018 and arrive at a higher TP of IDR1,960 (FY18F PE of 28.2x), based on the mid-value of DCF valuation (WACC 10.3% with higher terminal growth of 4%) and average 3-year PE of 30x. With upside to our TP of less than 10%, we upgrade our recommendation to HOLD. Natalia Sutanto (62-21) ext.3508 natalia.sutanto@danareksa.com Exhibit 1. Earnings revision Key Financials Year to 31 Dec 2015A 2016A 2017F 2018F 2019F Revenue, (IDRbn) 14,819 18,350 20,371 22,981 26,034 EBITDA, (IDRbn) 2,331 2,830 2,802 3,112 3,436 EBITDA Growth, (%) (1.0) Net profit (IDRbn) 1,220 1,355 1,378 1,556 1,825 EPS (IDR) EPS growth (%) BVPS, (IDR) DPS, (IDR) PER (x) PBV (x) Dividend yield (%) EV/EBITDA (x) See important disclosure at the back of this report 1

2 Previous New Changes (%) Rp bn Revenue 20,371 22,981 20,371 22, % 0.0% Gross profit 5,113 5,719 4,894 5, % -2.9% Operating profit 2,234 2,469 2,242 2, % 1.8% Net profit 1,372 1,564 1,380 1, % -0.5% Gross margin 25.1% 24.9% 2% 24.2% Operating margin 11.0% 10.7% 11.0% 10.9% Net margin 6.7% 6.8% 6.8% 6.8% Exhibit 2. 2Q17 result Financial performance 2Q16 1Q17 2Q17 yoy qoq 1H16 1H17 yoy 2017F 1H17/FY17F Revenue, IDRbn 4,595 4,980 4,411 -% -11.4% 9,276 9, % 20, % COGS 3,401 3,791 3, % -8.0% 6,748 7, % 15,477 Gross profit 1,193 1, % -22.5% 2,528 2, % 4,894 Opex % -% 1,412 1, % 2,652 Operating profit % -43.3% 1, % 2, % Pretax profit % -47.3% % 1,884 Net profit % -48.3% % 1, % Gross margin 26.0% 23.9% 20.9% 27.3% 22.5% 2% Operating margin 10.9% 11.8% 7.6% 1% 9.8% 11.0% Opex to revenue 15.0% 1% 13.3% 15.2% 12.6% 13.0% Pretax margin 8.0% 9.9% 5.9% 8.5% 8.0% 9.2% Net margin 5.8% 7.3% 4.2% 6.4% 5.8% 6.8% Revenue breakdown - IDR bn Food processing 2,43 2,706 2, % -19.1% 4,865 4,897 Coffee and chocolate 2, ,434 2, % -3.0% 4,727 4,794 Gross margin - by divisions Food processing 22.9% 24.9% 21.6% 25.0% 23.4% Coffee and chocolate 27.4% 21.2% 19.0% 27.7% 20.1% Operating margin - by divisions Food processing 4.8% 1% % 9.2% 9.8% Coffee and chocolate 16.6% 10.4% 1% 1% 14.5% See important disclosure at the back of this report 2

3 Exhibit 3. Revenues from the domestic market and exports (Rp tn) Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 Domestic Export Source: MYOR Exhibit 4. Revenues from the domestic market and exports (Rp bn) Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 Food processing Coffee & chocolate Source: MYOR Exhibit 6. Sugar price (USD/lb) Source: Bloomberg See important disclosure at the back of this report 3

4 Exhibit 7. Income Statement Revenue 14,819 18,350 20,371 22,981 26,034 COGS (10,620) (13,450) (15,477) (17,428) (19,785) Gross profit 4,198 4,900 4,894 5,552 6,248 EBITDA 2,331 2,830 2,802 3,112 3,436 Oper. profit 1,863 2,315 2,242 2,512 2,779 Interest income Interest expense (399) (378) (354) (347) (301) Forex Gain/(Loss) 152 (124) (19) (54) 0 Income From Assoc. Co s Other Income (Expenses) Pre-tax profit 1,640 1,845 1,882 2,124 2,490 Income tax (390) (457) (466) (526) (617) Minority interest (30) (34) (37) (42) (48) Net profit 1,220 1,355 1,378 1,556 1,825 Core Net Profit 1,068 1,479 1,397 1,610 1,825 Exhibit 8. Balance Sheet Cash & cash equivalent 1,682 1,543 1,236 1,210 1,331 Receivables 3,379 4,388 4,872 5,496 6,226 Inventory 1,763 2,124 2,417 2,722 3,144 Other Curr. Asset Fixed assets - Net 3,771 3,859 3,943 3,986 4,035 Other non-curr.asset Total asset 11,343 12,921 13,562 14,618 16,068 ST Debt 1,348 1,752 2,265 1,911 2,036 Payables 1,163 1,404 1,615 1,819 2,065 Other Curr. Liabilities Long Term Debt 2,461 2,074 1, Other LT. Liabilities Total Liabilities 6,148 6,407 6,309 6,202 6,270 Shareholder'sFunds 5,077 6,121 7,093 8,236 9,594 Minority interests Total Equity & Liabilities 11,343 12,672 13,562 14,618 16,068 See important disclosure at the back of this report 4

5 Exhibit 9.Cash Flow Net income 1,220 1,355 1,378 1,556 1,825 Depreciation and Amort Change in Working Capital 572 (1,291) (512) (657) (827) OtherOper. Cash Flow Operating Cash Flow 2,833 1,014 1,763 1,826 1,937 Capex (562) (774) (648) (646) (710) Others Inv. Cash Flow Investing Cash Flow (545) (759) (636) (632) (698) Net change in debt (795) 267 (689) (479) (374) New Capital Dividend payment (149) (275) (406) (413) (467) Other Fin. Cash Flow (399) (415) (354) (347) (301) Financing Cash Flow (1,319) (394) (1,434) (1,219) (1,118) Net Change in Cash 969 (139) (307) (26) 121 Cash - begin of the year 713 1,682 1,543 1,236 1,210 Cash - end of the year 1,682 1,543 1,236 1,210 1,331 Exhibit 10. Key Ratios Year to 31 Dec 2015A 2016A 2017F 2018F 2019F Growth (%) Sales EBITDA (1.0) Operating profit (3.2) Net profit Profitability (%) Gross margin EBITDA margin Operating margin Net margin ROAA ROAE Leverage Net Gearing (x) Interest Coverage (%) See important disclosure at the back of this report 5