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MAIN - Forex loss leads to 20% YoY net profit decline

Malindo Feedmill (MAIN) – Hold (Downgrade)

Price: Rp3,395 – Target Price: Rp3,620

Forex loss leads to 20% YoY net profit decline

  • MAINS’s net profit FY13 came in at Rp242bn, 28% below our previous estimate of Rp337bn and 29% below market estimates of Rp341bn. Results were in-line on revenue basis at Rp4,193bn compared to our estimate of Rp4,189bn.
  • On a YoY basis, revenue increased by 25% but net income declined by 20% with gross margin falling by 2% and forex loss of Rp106bn due to the 24% Rupiah depreciation from 2012YE to 2013YE.
  • However when the effect of forex loss is removed and core earnings in FY13 are compared to FY12, core earnings increased by 12% YoY. [Read more...]

KLBF – Profit beats estimates

Kalbe Farma (KLBF) – Buy (Maintain)

Price: Rp1,505; Target Price: Rp1,600

Profit beats estimates

  • KLBF beat our FY13 estimates by posting net profit of Rp1.9 trillion (+10.7% YoY), representing 109% of our FY13E. Meanwhile, sales came in-line at Rp16 triliion (+17.3% YoY). 4Q13 performance was solid with net income up 24.6% QoQ and revenue increasing 13.5% QoQ. Overall, audited results are in-line with unaudited results announced in Feb’14.
  • Nutritional division booked rapid revenue growth for the second consecutive year, mainly due to deeper penetration of its existing products such as Zee whose market share went up to 5.5% last year (vs. 3.7% in 2012). We expect Nutritional division to post 23% YoY revenue growth this year on the back of new product launches as well as continued expansion in Philippines, Myanmar and Vietnam.
  • We maintain our BUY call on KLBF with a target price of Rp1,600 implying 34x PE’14E which offers 6% potential upside. KLBF is trading at 30x forward PE, a 4% premium to its peers. Strong pricing power, solid financial performance and lucrative growth potential offered by the pharmaceutical market in Indonesia justifies KLBF’s premium valuation. Maintain BUY.


WINS - Smooth sailing

Wintermar Offshore Marine (WINS) – BUY (Maintain)

Price: Rp800 – Target Price: Rp910

Smooth sailing

  • WINS’s FY13 revenue jumped by 54% YoY to US$186.7 million while net profit increased by 34% to US$27.1 million YoY.
  • On a QoQ basis, revenue increased by 14% with Owned Vessel income increasing by 11% and chartering by an additional 27% with net profit increasing by 24%.
  • WINS’s FY13 results were above expectations on a revenue and net income basis at 106% of ‘13E for both. This was due to higher than expected revenue for both own vessels and chartering in 4Q13. [Read more...]

ROTI-In-line FY13 result

Nippon Indosari (ROTI) – Buy (Maintain)

Price: Rp1,100; Target Price: Rp1,500
In-line FY13 result

  • The company met lowered expectations for 2013 by reporting sales of Rp1.5 billion (+26% YoY) while net income increased by 6% YoY to  Rp158 billion.
  • The company slightly beat our EPS estimate posting Rp31.2 (vs. FY13E Rp30.8 per share.)
  • Breaking out the 4th quarter segment results, we see that margins improved across all markets with the rollout of a 10% ASP increase while new factories in Medan and Palembang turned profitable.  The company confirmed that the labor issue which impacted the West Java (Bekasi) market in 2Q-3Q13 was resolved as well as a logistical issue in Medan which impacted 2Q-3Q13 sales in that market.
  • We believe their FY14 guidance is conservative. With sales guidance of 20% growth and planned capex of only Rp120 billion, ROTI has the potential to beat its earnings forecast.
  • We reiterate our BUY call on ROTI with a target price of Rp1,500 implying 34x PE’14E which offers 36% potential upside. ROTI is trading at 24.9x forward PE which is a 10% discount to consumer staple sector. Maintain BUY.


AKRA – FY13 result came in-line

AKR Corporindo (AKRA) – Hold (Maintain)

Price: Rp4,825; Target Price: Rp5,075

FY13 result came in-line

  • AKRA posted 3% growth on FY13 revenue while net income was flat, but the results were in-line with our estimates.
  • In 4Q13 revenue grew 11% QoQ but net income fell 29.3% QoQ
  • Revenue growth in 4Q13 was mainly supported by higher ASP on all its products especially petroleum (+13% QoQ).
  • The higher ASP compensated lower petroleum distribution volume (-3.1% QoQ) while basic chemicals and manufacturing up by 5% & 3.4% QoQ.
  • Higher operating expenses in 4Q13 was due to higher salaries & wages as the company increased head counts, together with higher interest expenses due to new short term loan to finance working capital and forex loss.
  • As a result 4Q13 net income fell significantly making net margin to decline by 114bps and was recorded at 2%. Net margin for FY13 was 2.9% (-9bps).
  • We made no changes to our assumptions and projection, thereby maintaining our target price of Rp5,075 that implies 19.8x PE’14E and still offers 5% potential upside.
  • Therefore, we maintain our HOLD recommendation for AKRA while keeping watch for upside catalysts such as: higher oil price, IDR depreciation, and the signing of contract from investor into Gresik industrial estate. Maintain Hold.