Discounted cash flow model DCF Peer-based valuation

5. Valuation

We value Martina Berto in a wide range, between 12.5x to 18.0x 2011 PE. The lower range is roughly at ~ 20 premium to the illiquid peers that are being ignored by the market due to Martina Berto’s operational as the Indonesian Cosmetics King; other kings in the Indonesian consumer sector even the illiquid ones are currently trading in the range of 14.0x to 29.2x 2011 PE, with an average of 18.1x. From a regional angle, China India cosmetic peers trade at 15.6x to 36.6x 2011 PE.

5.1 Discounted cash flow model DCF

Our DCE model is based on these assumptions: we calculate unlevered free cash flows FCFs, which are then discounted at the weighted average cost of capital WACC in order to calculate the fair value of equity. We apply a cost of equity of 15.0 and cost of debt of 10.9 based on market estimates, which are assumed WACC has been derived using the Capital Asset Pricing Model CAPM. Our model’s key assumptions are as follows: Assumptions Source: Trimegah Securities Debt level 10.0 Equity level 90.0 Tax rate 25.0 Risk free rate 10.0 Debt margin 4.5 Post-tax cost of debt 10.9 Market Risk premium 5.0 Beta 1.0 Cost of equity 15.0 WACC 14.6 19 excellence. Our DCF prices Martina Berto at 15.3x 2011 PE. The higher range is due to its unique positioning assumptions, our DCF calculation values Martina Berto at 15.3x 2011 PE. constant for projected years. We use a WACC of 14.6, and a terminal growth rate of 2.0. Based on these

5.2 Peer-based valuation

Local Peers Local Indonesian peers Mandom Indonesia, Mustika Ratu are currently trading at an average 11.6x 2009 PE and 10.2x 2010 PE. We believe Martina Berto to trade at 20 premium to these uncompetitive and illiquid peers given the Company’s strong brand presence in Indonesia and association with Martha Tilaar group. This gives the lower range of MB’s valuation at ~12.5x 2011 PE. Comparable Company Trading Analysis Equity Enterprise Revenue PE PEG USDmn Country Value a Value b LFY Dec-10 Dec-11 Dec-10 Dec-11 Dec-09 Dec-10 Dec-11 2011 2008-09 2009-10 2010-11 Mandom Indonesia Tbk PT Indonesia 161.8 148.0 154.1 1.0x na 4.9x na 11.7x 10.2x na na 7.0 13.0 na Mustika Ratu Tbk PT Indonesia 27.0 17.0 38.0 na na na na 11.4x na na na 8.0 na na Mean 1.0x nm 4.9x nm 11.6x 10.2x nm nm 0.5

13.0 nm

Median 1.0x nm 4.9x nm 11.6x 10.2x nm nm 0.5

13.0 nm

Enterprise value as a multiple of Revenue EBITDA EPS Growth Source: Company, Reuters, Trimegah Securities Indonesian Consumer Kings Big consumer companies in Indonesia Indonesian Kings are currently trading in the range of 14.0x to 29.2x 2011 PE, with an average of 18.1x. Given the unique positioning of the Company as Indonesian Cosmetics King, we believe the higher range of Martina Berto’s valuation to be at par with other Kings in the Indonesian consumer market. This gives us a higher range of Martina Berto’s valuation at ~18.0x 2011 PE. Comparable Company Trading Analysis Equity Enterprise Revenue PEG USD in Mln Description Value a Value b LFY Dec-10 Dec-11 Dec-10 Dec-11 Dec-10 Dec-11 2011 2008-09 2009-10 2010-11 Astra International Tbk PT Auto King 24,333.2 26,796.1 10,936.4 1.9x 1.7x 12.8x 11.0x 17.0x 14.8x 1.0x 12.9 28.5 15.0 Unilever Indonesia Tbk PT Houshold Goods King 14,016.7 13,800.2 2,025.4 6.0x 5.2x 24.2x 20.9x 33.8x 29.2x 1.8x 26.6 22.3 15.9 Gudang Garam Tbk PT Cigaretes King 9,119.6 9,346.1 3,660.0 2.2x 2.1x 12.9x 11.2x 19.6x 16.4x 0.8x 83.6 21.6 19.5 Kalbe Farma Tbk PT Pharmaceutical King 3,616.2 3,526.9 1,008.7 3.1x 2.7x 15.4x 13.5x 25.9x 22.0x 1.3x 33.6 34.7 17.5 Charoen Pokphand Indonesia Tbk PT Chiken King 3,500.0 3,555.6 1,616.0 2.0x 1.8x 11.8x 11.1x 16.3x 15.1x 1.9x nm 20.1 8.0 Instant Noodle King 3,365.6 3,483.8 444.9 1.7x 1.6x 10.5x 10.1x 19.0x 18.1x 3.7x na nm 4.9 Mayora Indah Tbk PT Biscuit King 970.0 1,042.8 530.3 1.4x 1.1x 10.6x 8.7x 18.7x 15.1x 0.6x 89.3 25.9 24.0 ACE Hardware Indonesia Tbk PT D.I.Y King 442.6 390.6 150.8 2.1x 1.7x 13.7x 10.9x 22.8x 18.0x 0.8x 20.2 14.9 22.9 Mitra Adiperkasa Tbk PT 428.4 530.4 456.3 1.0x 0.9x 7.2x 6.2x 18.4x 14.1x 0.4x 386.9 18.1 35.6 Mean 2.4x 2.1x 13.2x 11.5x 21.3x 18.1x 1.4x

17.3 23.3