Refer to Important disclosures in the last page of this report

• 24%qoq/+34%yoy growth. This considerable recovery can be attributed to increase in sales volume, as the company has not increased their ASP this year. Export sales also remained strong in 3Q18, booking Rp3tn or growing +18%qoq/+32%yoy, making up around 46% of total sales. We believe that the company still has more upside potential, as they have not increased their ASP coupled with the recovery in domestic sales. The management has also hinted at a 2%-3% increase in ASP in 2019.

  N ^{o v -1 7 D e c -1 7 D e c -1 7 J a n -1 8 F e b -1 8 F e b -1 8 M a r- 1 8 A p r- 1 8 A p r- 1 8} _M ^{a y -1 8 J u n -1 8 J u l- 1 8 J u l- 1 8 A u g -1 8 S e p -1 8 S e p -1 8 O c t- 1 8 N o v -1 8} MYOR-Rebase JCI Index-Rebase

• 113%yoy/+24%qoq to Rp1.2tn (vs. 2Q18: Rp993bn; 3Q17: Rp580bn), still driven by high A&P spending. A&P expense still grew at an unusually inflated rate of
• 164%yoy/+22%qoq in 3Q18 (vs. 2Q18: 121% yoy; 3Q17: +81% yoy), making up around 14.7% of net sales for the quarter. This has pressured the company’s EBIT margin to stagnate at 7.4% in 3Q18 (vs. 2Q18: 7.4%; 3Q17: 11.1%). However, NPM still managed to expand slightly to 5.7% (+60bps qoq), on the back of higher forex gain in 3Q18 (+137% qoq). Management has also guided for a considerably lower A&P spending in 4Q18, easing the pressure on EBIT margin going forward.

  26.6

  36.2

  34.9

  41.1

  10.6 PER (x)

  19.6

  30.6

  32.0

  40.4

  19.7 Net Gearing (%)

  36.1

  69 93 112 EPS Growth (%) (95.6) 17.7 (3.7)

  71

  61

  22.3 PBV (x)

  7.6

  8.9

  20.6

  90 100 110 120 130 140 150 160

  E q u it y | I n d o n e s ia | C o n s u m e r S ta p le s

  14.5 Source : MYOR, IndoPremier Share Price Closing as of : 12-November-2018

  16.9

  22.6

  19.4

  1.1 EV/EBITDA (x)

  6.6

  0.8

  0.9

  0.9

  0.5

  4.6 Dividend Yield (%)

  5.5

  15.3 Net Profit (RpBn) 1,355 1,594 1,536 2,090 2,501 EPS (Rp)

  21.4 6.0 (13.6)

  31.4

  0.2 Price Performance

  22.0 52w high/low (Rp) 3,140 - 1,945

  17.5 Relative to JCI (%) -10.6 -12.2

  Absolute (%) -10.8 -12.3

  12M

  6M

  3M

  15.7 Avg. 6m dailyT/O (US$ m)

  PT Unita Branindo 32.9% Mayora Dhana Utama 26.1% Jogi Hendra Atmadja 25.2%

  Sharesoutstanding (m) 22,359 Marketcap. (US$ m) 3,757 Free float (%)

  Upside/downside (%) +8.4

  Shareprice (Rp) Rp2,490

  Prior TP (Rp) Rp2,700

  Target price (Rp) Rp2,700

  Stock Data

  Major Shareholders

  Estimate Change; Vs. Consensus 2018F 2019F

  Revenue (RpBn) 18,350 20,817 23,556 26,646 29,978 EBITDA (RpBn) 2,830 3,000 2,593 3,407 3,927 EBITDA Growth (%)

  Improvement in 3Q18, but still falls short of expectation. MYOR recorded net earnings of Rp373bn in 3Q18 (-4% yoy; +33% qoq) and Rp1.1tn in 9M18 (+19% yoy), forming 75% of ours but only 63% of consensus estimate. This is partly contributed to the strengthening of the USD and minimal increase in raw material prices, causing forex gain to spike in 3Q18. Meanwhile, net sales recorded Rp6.5tn in 3Q18 (+33% yoy; +21% qoq) and Rp17.4tn cumulatively in 9M18 (+21% yoy), forming 74% and 73% of ours and consensus respectively. Growth in 3Q18 was mainly driven by food processing growing by +34% qoq (+30% yoy), contributing to 55% of sales (vs. 2Q18: 44%). Despite falling slightly below expectation, we think that the company is on the right track to recovery.

  Year To 31 Dec 2016A 2017A 2018F 2019F 2020F

  13 November 2018 Company Update HOLD (From Sell)

  Mayora Indah (MYOR IJ)

  Valuation. We slightly improve our FY19F revenue forecast on the back of expected ASP increase next year. We also raise our net earnings forecast by 2.0%/3.1% following the higher than expected forex gain caused by strengthening of USD. We are more optimistic on MYOR going forward, on the back of domestic demand improvement and benefit of stronger USD. We roll over our valuation to FY19F and upgrading our call to HOLD with a TP of Rp2,700 (based on target P/E of 29x). We transfer coverage from

Putri Tobing to Elbert Setiadharma.

  Margin pressure still remained. In 3Q18 opex growth remained high, growing at

  Signs of pick up in domestic demand. After a decline in domestic sales in 2Q18 (- 7.3% qoq), a significant recovery was seen in 3Q18, booking Rp3.6tn or a

  Road to recovery Improvement in 3Q18, although slightly below expectation. Signs of domestic demand recovery. Margin pressure still remained, due to high opex growth. Upgrade rating to HOLD with TP of Rp2,700.

  Latest EPS (Rp)

  PT Indo Premier Sekuritas elbert.setiadharma@ipc.co.id

  Source: Bloomberg Elbert Setiadharma

  3.1 Vs. Consensus (%) (12.5) (1.1)

  2.0

  93 Vs. Prior EPS (%)

  69

• 62 21 5793 1169

  Fig. 1: Sales and segmental growth forecast Fig. 2: Quarterly segmental sales growth trend _{25,000 23,556 30,000 20,817 26,646 30% 35% 25% 90% Food YOY Growth (%) Coffee YOY Growth (%) 10,000} 20,000 _{15,000 10,511 12,018 14,169 14,819 18,350 70% 5%} ^20% _{15% 10% 30% 50% 5,000 2012 2013 2014 2015 2016 2017 2018F 2019F Sales (Rp Bn; LHS) Food Processing YOY Growth (%; RHS)} 0% 10% _{-5% -10% -30% -10% 5 Q Q Q Q Q Q Q Q Q Q Q Q Q Q 2 1 1 5 3 5 1 4 1 1 6 6 2 1 1 6 3 4 6 1 1 7 1 2 7 1 7 3 1 7 1 4 1 1 - 8 1 2 8 8 3 1 Coffee YOY Growth (%; RHS)} -50% Source: Company, IndoPremier Source: Company, IndoPremier

  Fig. 3: 3Q18 sales breakdown Fig. 4: Quarterly advertising & promotion expense trend A&P Expense (Rp Bln; LHS) A&P-as-percentages-of-sales (%; RHS) 1,000

  17% 900 15% 800

  Domestic Sales (%) 700 13%

  54% 600

  Export Sales 500

  11% (%) 46%

  400 9% 300

  200 7% 100 5% -

  4

  4

  4

  5

  5

  5

  5

  6

  6

  6

  6

  7

  7

  7

  7

  8

  8

  8

  1

  1

  1

  1

  1

  1

  1

  1

  1

  1

  1

  1

  1

  1

  1

  1

  1

  1 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q

  2

  3

  4

  1

  2

  3

  4

  1

  2

  3

  4

  1

  2

  3

  4

  1

  2

  3 Source: Company, IndoPremier Source: Company, IndoPremier _{3,000 3,500} Fig. 5: MYOR EBIT forecast Fig. 6: Earnings and ROE forecast _{EBIT (Rp Bn; LHS) EBIT Margin (%; RHS) Earnings (Rp Bn; LHS) ROE (%; RHS) 2,983 14% 2,500 2,090 32% 37% 2,000 1,863 1,500 2,500 2,315 2,461 2,194 10% 8% 12% 1,500} 2,000 _{1,042 1,220 1,355 1,594 1,536 27% 17% 22% 1,000 500 1,157} 1,305 _{891 2%}

_{6% 1,000}

_{4% 500 403 730 7% 12% 2012 2013 2014 2015 2016 2017 2018F 2019F 2012 2013 2014 2015 2016 2017 2018F 2019F -} 0% - _2%

  Source: Company, IndoPremier Source: Company, IndoPremier

  Fig. 7: 9M18 result summary (IDR Bn)

  FY18F FY19F old new (%) old new (%) Net sales 23,556 23,556 0.0% 26,584 26,646 0.2%

  GPM 26.1% 26.1% 25.8% 25.9% OPM 9.3% 9.3% 11.0% 11.2% NPM 6.4% 6.5% 7.6% 7.8%

  Margins (%)

  91 93 3.1%

  67 69 2.0%

  Net profit 1506 1,536 2.0% 2,028 2,090 3.1% EPS

  Other -149 -109 -26.8% -163 -153 -6.1% Tax 499 509 2.0% 677 697 3.0%

  Operating profit 2194 2,194 0.0% 2,913 2,983 2.4%

  Operating cost 3,949 3,949 0.0% 3,935 3,917 -0.5%

  Gross profit 6,143 6,143 0.0% 6,848 6,900 0.8%

  COGS 17,413 17,413 0.0% 19,736 19,746 0.1%

  Source: Company, IndoPremier Fig. 8: Earnings Revision (Rp Bn)

  3Q17

  Gross Margin (%) 22.9% 25.8% 26.3% 22.6% 25.9% Oper. Margin (%) 11.1% 7.4% 7.4% 10.3% 8.6% Net Margin (%) 7.9% 5.1% 5.7% 6.6% 6.5%

  

Net Profit 389 277 373 35% -4% 951 1,128 19% 63% 75%

  Other (28) (32) 10 130% 135% (201) 15 107% Tax 129 92 123 33% -4% 316 379 20%

  

Operating Profit 545 402 486 -21% -11% 1,468 1,493 2% 54% 68%

  Operating Cost 579 993 1,231 24% 113% 1,767 3,005 70%

  

Gross Profit 1,124 1,394 1,717 23% 53% 3,235 4,498 39% 75% 73%

  COGS 3,784 4,007 4,816 20% 27% 11,064 12,852 16%

  9M18 % YoY vs. cons vs. ours

Net Sales 4,908 5,402 6,533 21% 33% 14,299 17,350 21% 73% 74%

  9M17

  3Q18 % QoQ % YoY

  2Q18

  Source: Company, IndoPremier

  Year To 31 Dec (RpBn) 2016A 2017A 2018F 2019F 2020F Income Statement

  Net Revenue 18,350 20,817 23,556 26,646 29,978 Cost of Sales (13,450) (15,842) (17,413) (19,746) (22,210) Gross Profit 4,900 4,975 6,143 6,900 7,768 SG&A Expenses (2,585) (2,514) (3,949) (3,917) (4,288) Operating Profit 2,315 2,461 2,194 2,983 3,480 Net Interest (342) (350) (359) (363) (297) Forex Gain (Loss) (124) 91 250 210 200 Others-Net (3) (15) Pre-Tax Income 1,846 2,187 2,085 2,830 3,384 Income Tax (457) (556) (509) (697) (836) Minorities Net Income 1,355 1,594 1,536 2,090 2,501

  Balance Sheet

  Cash & Equivalent 1,543 2,202 2,623 2,400 2,428 Receivable 4,364 5,744 5,808 6,205 6,981 Inventory 2,124 1,825 2,624 2,975 3,347 Other Current Assets 709 903 695 786 885

  Total Current Assets 8,740 10,674 11,750 12,367 13,640 Fixed Assets - Net 3,859 3,989 4,240 4,466 4,669 Goodwill Non Current Assets 323 253 400 400 400 Total Assets 12,922 14,916 16,390 17,233 18,710 ST Loans 1,284 1,634 2,684 2,534 1,860 Payable 1,330 1,717 1,515 1,704 Other Payables 553 528 310 343 384 Current Portion of LT Loans 718 594 1,004 240 240

  Total Current Liab. 3,884 4,474 5,429 4,632 4,188 Long Term Loans 2,074 2,226 1,642 1,610 1,610 Other LT Liab. 699 862 862 862 862

  Total Liabilities 6,657 7,562 7,933 7,104 6,660 Equity 446 442 448 448 448 Retained Earnings 5,675 6,744 7,821 9,468 11,368 Minority Interest 144 168 189 213 234

  Total SHE + Minority Int. 6,265 7,354 8,457 10,129 12,050 Total Liabilities & Equity 12,922 14,916 16,390 17,233 18,710

  Source : MYOR,IndoPremier

  Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Cash Flow

  Net Income (Excl.Extraordinary&Min.Int) 1,355 1,594 1,536 2,090 2,501 Depr. & Amortization 506 500 399 424 447

  (1,015) Changes in Working Capital (1,333) (578) (1,518) (723) Others 365 337 25 722 297

  Cash Flow From Operating 928 1,889 482 2,555 2,276 Capital Expenditure (801) (559) (797) (650) (650) Others

  15

  36

  50

  40

  40 Cash Flow From Investing (786) (522) (747) (610) (610) Loans 267 378 875 (945) (674) Equity Dividends (275) (481) (478) (461) (627) Others (165) (203) (383) (380) (315)

  Cash Flow From Financing (173) (306) 14 (1,786) (1,616) Changes in Cash (31) 1,062 (251) 160

  49 Financial Ratios Gross Margin (%)

  26.7

  23.9

  26.1

  25.9

  25.9 Operating Margin (%)

  12.6

  11.8

  9.3

  11.2

  11.6 Pre-Tax Margin (%)

  10.1

  10.5

  8.9

  10.6

  11.3 Net Margin (%)

  7.4

  7.7

  6.5

  7.8

  8.3 ROA (%)

  11.2

  11.5

  9.8

  12.4

  13.9 ROE (%)

  23.6

  23.4

  19.4

  22.5

  22.6 ROIC (%)

  14.4

  14.9

  12.6

  15.3

  17.0 Acct. Receivables TO (days)

  76.9

  88.6

  89.5

  82.3

  80.3 Acct. Receivables - Other TO (days)

  0.0

  0.0

  0.0

  0.0

  0.0 Inventory TO (days)

  6.9

  8.0

  7.8

  7.1

  7.0 Payable TO (days)

  31.9

  35.1

  33.0

  27.2

  26.4 Acct. Payables - Other TO (days)

  7.7

  5.3

  5.2

  4.9

  5.0 Debt to Equity (%)

  65.1

  60.6

  63.0

  43.3

  30.8 Interest Coverage Ratio (x)

  0.2

  0.2

  0.2

  0.1

  0.1 Net Gearing (%)

  40.4

  30.6

  32.0

  19.6

  10.6 Source : MYOR,IndoPremier

  Head Office PT INDO PREMIER SEKURITAS Wisma GKBI 7/F Suite 718 Jl. Jend. Sudirman No.28 Jakarta 10210 - Indonesia p +62.21.5793.1168 f +62.21.5793.1167

INVESTMENT RATINGS

  BUY : Expected total return of 10% or more within a 12-month period HOLD : Expected total return between -10% and 10% within a 12-month period SELL : Expected total return of -10% or worse within a 12-month period ANALYSTS CERTIFICATION.

  The views expressed in this research report accurately reflect the analysts personal views about any and all of the subject securities or issuers; and no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.

  DISCLAIMERS

  This research is based on information obtained from sources believed to be reliable, but we do not make any representation or warranty nor accept any responsibility or liability as to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for general circulation. Any recommendations contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is not and should not be construed as an offer or a solicitation of an offer to purchase or subscribe or sell any securities. PT. Indo Premier Sekuritas or its affiliates may seek or will seek investment banking or other business relationships with the companies in this report.