BAHANA TBLA Rated OCT 2016
Cor por a t e fla sh
Asiamoney’s
2013
Best Domestic
Equity House
7 Oct obe r 2 0 1 6
Tu na s Ba r u La m pu ng
BUY
Sect or: Plant at ions ( Neut ral)
( unchanged)
Rat ing m om ent um * :
Gr e gor iu s Ga r y
PX: I DR1,010–TP: I DR1,470 (from I DR1,180)
TP/ consensus: 110% ; TP m om ent um * :
JCI : 5,377
E- m ail: gregorius@bahana.co.id
Phone: + 6221 250 5081 ext . 3604
Suga r r ush
Be ne ficia r y of 4 m n- t on st r u ct ur a l de ficit in dom e st ic suga r indust r y:
On t he back of a m aj or sugar expansion, TBLA is likely t o benefit from
I ndonesia’s penchant for sweet s wit h sugar per capit a consum pt ion of 23 kg
( exhibit 16) , one of t he highest in t he world. Dom est ically, we see a huge
st ruct ural deficit of 4m n t ons ( exhibit 17) wit h consum pt ion of 6.5m n t ons
and product ion of j ust 2.5m n t ons from 9 sugar- producing regions. This has
result ed in I ndonesia becom ing one of t he world’s largest sugar im port ers,
bringing in 3m n t ons of sugar annually ( exhibit 20) . I n t he past 35 years, t he
sugar deficit widened significant ly as dom est ic dem and out st ripped
product ion wit h sugarcane plant ing areas experiencing only 1.1% CAGR in
1980- 2015. Furt herm ore, product ivit y was low averaging 5.6 t ons/ ha,
im plying t he absence of sizeable invest m ent s wit hin t he local sugar indust ry.
Subst a n t ia l t im e r e quir e d t o cr e a t e a se lf- sufficie nt indust r y: The
governm ent aim s for I ndonesia t o achieve sugar self- sufficiency by 2019.
However, on lim it ed land availabilit y and m assive invest m ent requirem ent of
I DR82t n ( exhibit 22) , t his sugar self- sufficiency plan is unlikely t o be realized
given t he required addit ional plant ing areas of 486k ha, even higher t han t he
current plant ed area of 456k ha. Hence, we expect t he sugar deficit t o
persist over t he long t erm , allowing bot h im port ers and plant ers like TBLA t o
benefit from cont inued undersupply condit ions.
Lik e ly t o book st r on g gr ow t h on indust r y ine fficie ncy: I n an effort t o
prot ect farm ers and encourage local players t o ent er t he sugar business, t he
governm ent has set t he sugar floor price at alm ost t wice t hat of t he
int ernat ional raw sugar price ( exhibit 23) . I ndonesia’s sugar floor price refers
t o farm ers’ cost of product ion as est im at ed by t he Agricult ure Minist ry.
TBLA’s 2017F product ion cost is at I DR4,402/ kg, 27% lower t han t he
indust ry’s average of I DR6,022/ kg and 50% lower t han t he average farm er’s
cost of product ion of I DR8,790/ kg ( exhibit 24) . That said, TBLA should enj oy
st rong 2017F net earnings of I DR891bn, + 78% y- y, due t o indust r y
inefficiency. I t is wort h not ing t hat TBLA experiences 83% higher yields of
I DR36.5m n/ ha from sugar , versus I DR20.5m n/ ha for CPO ( exhibit 35) .
W e e x pe ct a st r ong 7 9 % EPS CAGR in 2 0 1 5 - 1 8 F; Ra ise d TP
We now expect higher sust ainabilit y for TBLA’s sugar refinery and sugar m ill
businesses. Based on t he governm ent ’s recent discussions t o allow refined
sugar t o be sold at t he ret ail level, coupled wit h plans t o prohibit im port ers
lacking sugarcane plant at ions from obt aining im port perm it s, we believe TBLA’s
sugar refinery business t o be m ore sust ainable, booking 2017F earnings of
I DR214bn, 24% of t he t ot al. As such, we now raise our t arget PE for t he sugar
refinery business from 1x t o 2.5x, st ill a 50% discount t o t he regional pure
refinery player. This gives a higher 12M SOTP- based TP of I DR1,470 ( exhibit
46) , reflect ing 46% upside pot ent ial. Wit h t his and t he posit ive sent im ent from
TBLA’s CPO segm ent wit h a higher average 2017F CPO price of USD750/ m t
( 2016: USD625/ m t ) , t he st ock’s st rong m arket out perform ance ( exhibit 4) is
likely t o persist . BUY. Risk s: Delays in t he com plet ion of TBLA’s sugar m ills as
well as policy risks st em m ing from lower im port quot as and sugar price ceiling.
Ex hibit 1 . Com pa n y inform a t ion
Market cap ( I DRb/ USDm )
:
3M avg.daily t .o.( I DRb/ USDm )
:
Bloom berg code
:
5,395.5/ 414.4
5,247.7/ 404.1
TBLA I J
Source: Bloom berg
Ex hibit 2 . Sha r eh olde r s in form at ion
Budi Delt a Sw akarya ( % )
:
Sungai Budi ( % )
:
Ot hers ( % )
:
Free float ( % )
:
27.80
26.49
1.47
45.62
Source: Bloom berg
Ex hibit 3 . Ke y fore ca st s an d va lu at ion s
2015 2016F 2017F
Ye a r t o 3 1 D e c
Revenue ( I DRbn)
5,331
6,609 8,181
EBI T ( I DRt n)
604
782 1,334
Net profit ( I DRbn)
197
500
891
Bahana/ cns. ( % )
74
99
EPS ( I DR)
37
94
167
EPS growt h ( % )
( 58)
154
78
EV/ EBI TDA ( x)
11.8
9.4
6.3
PER ( x)
27.4
8.1
6.1
FCFPS ( I DR)
( 0)
0
( 0)
FCF yield ( % )
( 0.0)
0.0
( 0.0)
BVPS ( I DR)
536
603
699
PBV ( x)
1.9
1.3
1.4
DPS ( I DR)
23
28
70
Yield ( % )
2.3
3.7
7.0
ROAA ( % )
2.4
5.1
8.0
ROAE ( % )
7.4
16.4
25.6
EBI T m argin ( % )
11.3
11.8
16.3
Net gearing ( % )
153.3
127.0 134.5
2018F
9,465
1,651
1,128
119
211
27
5.4
4.8
0
0.0
785
1.3
125
12.4
8.9
28.5
17.4
134.3
Source: Bloom berg, Bahana est im at es
Not e: Pricing as of close on 7 Oct ober 2016
Ex hibit 4 . Rela t ive sh a re price pe r for m a n ce
(% )
(% )
100
90
89.2
81.0
81.0
80
60
90
80
69.0
70
100
70
60
51.1
50
50
40
40
30
30
18.2
20
20
10
10
0
0
yt d
1M
3M
6M
9M
12M
TBLA I J r elat ive t o JCI
Source: Bloom berg, Bahana
Ex hibit 5 . Rela t ive pe rform an ce t o JCI , yt d
(% )
105
(% )
98.0
105
85
85
65
65
47.0
45
45
21.5
25
16.7
14.8
25
12.4
1.5
5
5
( 15)
( 15)
( 35)
( 33.3)
( 55)
( 35)
( 55)
TBLA
SI MP
ANJT
Sect or
LSI P
SGRO
AALI
DSNG
Source: Bloom berg, Bahana
Disclosure: Bahana Securit ies does and seeks t o do business wit h com panies covered in it s research report s. I nvest ors should consider t his report as only a single fact or in
m aking t heir invest m ent decision.
Please see t he im port ant disclaim er inform at ion on t he back of t his r eport
*Based on consensus’ recent changes ↑ (up), ↓ (down), ↔ (unchanged)
7 Oct obe r 2 0 1 6
SUGAR I N D USTRY OVERVI EW
There are current ly 9 sugar- producing regions in I ndonesia ( exhibit 7) : Nort h
Sum at era, Sout h Sum at era, Lam pung, West Java, Cent ral Java, Jogj akart a, East Java,
Goront alo and Sout h Sulawesi. East Java was t he largest sugar- producing province in
t he count ry as of 2015, w it h product ion of 1.24m n t ons or around 50% of t ot al sugar
product ion. East Java had t he largest sugarcane plant ed area of 207k ha as of 2015.
Lam pung was t he second- largest sugar producer, wit h 757k t ons of sugar product ion
and a t ot al plant ed area of 125k ha. From a t ot al sugarcane plant at ion area of 456k ha,
I ndonesia produced around 2.5m n t ons of sugar for bot h dom est ic and overseas
consum pt ion.
9 suga r - pr oducing r e gions in
I ndone sia ge ne r a t e d 2 .5 m n
t on s of suga r a s of 2 0 1 5
Ex hibit 6 . I ndone sia ’s 5 la r ge st suga r - pr odu cing pr ovince s, 2 0 1 5
Ea st Ja va w a s t he lar ge st
suga r - pr oducing pr ovin ce …
Source: I ndonesia St at ist ics Agency
Ex hibit 7 . Su ga r ca ne pla nt a t ion a r e a m a p, 2 0 1 5
… suppor t e d by t he la r ge st
pla nt a t ion a r e a of 2 0 7 k ha
Source: I ndonesia St at ist ics Agency
I ndonesia’s sugar indust ry developm ent has occurred at a slow pace. During t he past
35 years, dom est ic sugar product ion only saw a 2% CAGR, from 1.3m n t ons in 1980 t o
2.5m n t ons in 2015 ( exhibit 8) . Slow dom est ic sugar product ion growt h occurred
m ainly due t o low growt h in sugarcane plant ed area developm ent , which only saw a
1.1% CAGR, from 316k ha in 1980 t o 456k ha in 2015. Moreover, sugarcane
product ivit y yields in I ndonesia have not seen m uch im provem ent during t his t im e. The
product ivit y yield was only at 5.6t ons/ ha as of 2015 ( exhibit 9) , im plying inefficiencies
in t he sugar product ion process. These t wo fact ors have result ed in low sugar
product ion growt h.
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
Suga r indu st r y de ve lopm e nt
ha s occur r e d a t a slow pa ce
…
7 Oct obe r 2 0 1 6
Ex hibit 8 . D om e st ic su ga r pr oduct ion, 1 9 8 0 - 2 0 1 5
( m n t ons)
2.8
… w it h only a 2 % CAGR for
dom e st ic suga r pr oduct ion
2.6
2.4
2.2
2.0
1.8
1.6
1.4
1.2
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1.0
Source: I ndonesia St at ist ics Agency, Bahana
Ex hibit 9 . Su ga r ca ne pla nt e d a r e a a nd pr oduct iv it y yields, 1 9 8 0 - 2 0 1 5
( t ons/ ha)
( ha)
500,000
7. 0
480,000
6. 5
Only a 1 .1 % CAGR for t ot a l
pla nt e d a r e a s dur in g t he
pe r iod, w it h low pr oduct ivit y
of 5 .6 t on/ ha a s of 2 0 1 5
460,000
6. 0
440,000
5. 5
420,000
400,000
5. 0
380,000
4. 5
360,000
4. 0
340,000
3. 5
320,000
300,000
Sugarcane plant ed ar ea
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
3. 0
Pr oduct iv it y yield ( RHS)
Source: I ndonesia St at ist ics Agency, Bahana
Ex hibit 1 0 . Su ga r ca ne a r e a ow ne r ship br e a k dow n, 1 9 8 0 - 2 0 1 5
M a j or it y
of
suga r ca ne
pla nt a t ions
ow ne d
by
sm a llholde r s
( ha)
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
Sm allholder
Gover nm ent plant at ion
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
-
Pr ivat e plant at ion
Source: I ndonesia St at ist ics Agency, Bahana; Sm allholder: owner of sm all far m s ( 20 ha or less) , usually t o
support a single fam ily
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
7 Oct obe r 2 0 1 6
Ex hibit 1 1 . Su ga r ca ne pr oduct ivit y yie ld br e a k dow n by ow ne r ship, 1 9 8 0 - 2 0 1 5
Pr iva t e
se ct or
fe a t ur e s
highe r pr oduct ivit y yield …
Source: I ndonesia St at ist ics Agency, Bahana
Privat e plant at ions, which cont ribut ed 30% of I ndonesia’s overall plant at ion area as of
2015, have t he highest product ivit y yields ( exhibit 11) com pared t o t he governm ent
and sm allholdings, at 5.9 t ons/ ha, wit h t he sm allholdings yield at 5.3 t ons/ ha and t he
governm ent ’s yield at only 4.5 t ons/ ha. We t hink t his im plies t hat t he governm ent has
not invest ed in t he sugar indust ry sufficient ly t o increase product ivit y. Furt herm ore,
underinvest m ent has creat ed inefficiency, which has result ed in high product ion cost s.
On average, t he I ndonesia sugar indust ry, represent ed by Perkebunan Nusant ara
( PTPN) as st at e- owned sugar producers, had an average product ion cost at
I DR6,022/ kg in 2015 while privat e plant at ions such as TBLA had 27% lower product ion
cost s of I DR4,402/ kg due t o higher plant at ion yields and ext ract ion rat es.
… a t 5 .9 t on s/ ha w hile
gove r nm e nt pla nt a t ion yie ld
is only 4 .5 t on s/ ha
Ex hibit 1 2 . Su ga r pr odu ct ion cost , TBLA ve r su s indust r y, 2 0 1 5
( I DR/ k g)
6,500
6,022
TBLA’s pr odu ct ion cost w a s
27%
low e r
t ha n
t he
indust r y’s in 2 0 1 5
6,000
5,500
5,000
4,500
4,402
4,000
3,500
TBLA
I ndust r y
Source: Bahana, Com pany
Problem s in developing sugarcane plant at ion areas arise from difficult ies in finding a
suit able region, as t he plant at ion area needs t o be close t o t he sugar m ill t o preserve
t he sugarcane from det eriorat ion. As of 2015, 57 out of 69 sugar m ills in operat ion
were concent rat ed in t he Java region ( exhibit 13) , where no available land was left t o
increase t he sugarcane plant at ion area. I n addit ion, I ndonesia has suffered from low
ext ract ion rat es as m ost sugar m ills use obsolet e t echnology. Of t he 69 m ills, a t ot al of
47 sugar m ills, cont ribut ing 61% of t ot al m illing capacit y ( exhibit 15) , were built during
Dut ch colonial t im es ( exhibit 14) and have not m ade t echnological im provem ent s t o
increase product ivit y.
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
Lim it e d
a va ila bilit y
suga r ca ne pla nt a t ion
hinde r s e x pa n sion
of
area
7 Oct obe r 2 0 1 6
Ex hibit 1 3 . Su ga r m ill loca t ions
5 7 out of 6 9 suga r m ills a r e
loca t e d in t he Ja va r e gion
2
1
1
1
4
3
8
15
1
33
Num ber of sugar m ill
wit hin t he region
Source: Bahana
Ex hibit 1 4 . W a t oe t oe lis suga r m ill pla nt , Ea st Ja va
St a t e - ow ne d
PTPN ’s
W a t oe t oe lis su ga r m ill w a s
built
in
1839
a nd
st ill
ope r a t e s w it h out a ny m a j or
cha n ge s
to
im pr ove
e fficie ncy
Source: Bahana
Ex hibit 1 5 . I n done sia su ga r m ills: a ge a nd m illing ca pa cit y br e a k dow n, 2 0 1 5
Age
( ye a r s)
0- 25
N um be r of
pla nt s
Pe r ce nt a ge
(% )
M illin g ca pa cit y
( t cd)
5
7.2
29,928
14
20.3
43,195
3
4.3
9,256
> 100
47
68.1
130,510
Tot a l
69
100
2 1 2 ,8 8 8
26- 50
50- 100
Source: Bahana
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
68%
of
su ga r
m ills in
I ndone sia , cont r ibut in g 6 1 %
m illing ca pa cit y, a r e m or e
t ha n 1 0 0 ye a r s old
7 Oct obe r 2 0 1 6
Ex hibit 1 6 . Globa l su ga r consum pt ion pe r ca pit a , 2 0 1 5
( k g/ capit a)
60
I ndone sia
ha s
t he
8th
la r ge st pe r ca pit a suga r
consum pt ion in t he w or ld
55
50
39
38
40
37
34
33
30
23
23
21
20
12
10
0
Br azil
Russia
Mex ico
EU
Egypt
US
Pak ist an
I ndonesia
I ndia
China
Source: USDA, Bahana
Ex hibit 1 7 . I n done sia su ga r pr oduct ion a nd consum pt ion, 1 9 9 7 - 2 0 1 5
( m n t ons)
7.0
6.2
6.0
5.1
5.0
5.5
5.6
2.3
2.2
5.6
6.5
5.8
5.3
Suga r de ficit due t o lim it e d
de ve lopm e nt
of
suga r
pr oduct ion
out pa ce d
by
consum pt ion gr ow t h
4.5
4.3
4.0
3.1
3.1
3.3
3.5
3.6
3.7
3.8
3.9
3.9
2.6
3.0
2.2
2.0
2.1
1.5
1.5
1.7
1.7
1.8
2.2
2.6
2.6
2.3
2.1
2.6
2.6
2.5
1.6
1.0
0.0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Consum pt ion
Pr oduct ion
Source: Bloom berg, Bahana
On t he ot her hand, I ndonesia is one of 10 count ries wit h t he highest sugar
consum pt ion at 23 kg/ capit a in 2015 ( exhibit 16) . Dom est ic sugar consum pt ion
doubled from 3.1m n t ons in 1997 t o 6.5m n t ons, for an 18- year CAGR of 10.1% . The
rapid growt h of sugar consum pt ion, which has out paced t he lim it ed developm ent of
sugar product ion, has creat ed a st ruct ural deficit in I ndonesia’s sugar indust ry. The
deficit has worsened over t im e from 850k t ons in 1997 t o 4m n t ons in 2015, creat ing a
significant gap ( exhibit 17) . The prolonged undersupply condit ions in t he sugar m arket
also have driven t he average ret ail price from I DR10,400/ kg in June 2011 t o as high as
I DR16,200/ kg in July 2016 ( exhibit 18) .
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
W ide ning suga r de ficit ha s
dr ive n r e t a il pr ice …
7 Oct obe r 2 0 1 6
Ex hibit 1 8 . I n done sia ’s suga r r e t a il pr ice a nd floor pr ice , Ja n 2 0 1 1 - Aug 2 0 1 6
( I DR/ k g)
…
to
5 - ye a r
high
at
I D R1 6 ,2 0 0 / k g in July 2 0 1 6
18,000
16,000
14,000
12,000
10,000
8,000
Av erage r et ail price
Jul- 16
May- 16
Jan- 16
Mar - 16
Nov- 15
Jul- 15
Sep- 15
May- 15
Jan- 15
Mar - 15
Nov- 14
Jul- 14
Sep- 14
May- 14
Jan- 14
Mar - 14
Nov- 13
Jul- 13
Sep- 13
May- 13
Jan- 13
Mar - 13
Nov- 12
Jul- 12
Sep- 12
May- 12
Jan- 12
Mar - 12
Nov- 11
Jul- 11
Sep- 11
May- 11
Jan- 11
Mar - 11
6,000
Floor pr ice
Source: Bahana, Bloom berg
Ex hibit 1 9 . I n done sia su ga r indu st r y br e a k dow n
Sugarcane
Sugar
mill
White sugar (for
retail)
Imported
raw sugar
Sugar
refinery
Refined sugar
(for industry)
I ndone sia ’s su ga r indust r y is
divide d int o 2 se gm e nt s:
w hit e
su ga r
for
r e t a il
consum pt ion
a nd
r e fine d
suga r for F& B indust r y
Source: Com pany, Bahana
Ex hibit 2 0 . I n done sia su ga r im por t volum e , 1 9 9 7 - 2 0 1 5
( m n t ons)
4.0
3.4
3.3
3.5
3.0
2.9
3.0
2.7
2.4
2.5
2.0
2.0
1.5
1.4
1.5
0.8
1.0
1.4
1.3
1.0
1.0
1.4
1.4
1.1
1.0
0.6
0.5
0.0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: I ndonesia St at ist ics Agency
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
I ndone sia is de pe nde nt on
suga r
im por t s
to
fulfil
consum pt ion
7 Oct obe r 2 0 1 6
I ndonesia relies heavily on sugar im port s ( exhibit 20) t o fulfil t he dom est ic dem and
and t o cont rol t he m arket price am id sugar short ages. As st ipulat ed under Law
no.117/ 2015, privat e players can im port raw sugar and refined sugar aft er obt aining
approval from Trade Minist ry, while only SOEs can im port whit e sugar. Raw sugar,
m ainly im port ed from Brazil, I ndia, China and Thailand, is used as a raw m at erial t o
produce refined sugar for t he F&B indust ry ( exhibit 19) . The Governm ent also
m aint ains im port quot as t o develop t he dom est ic sugar indust ry and at t ain selfsufficiency in sugar product ion. The quot a is shared by I ndonesia’s 8 sugar refining
com panies wit h a t ot al product ion capacit y of 3.6m n t ons, and Wilm ar group dom inat es
t he quot a wit h 960k t ons, or 27% of t he t ot al capacit y. TBLA obt ained 262k t on of t he
sugar im port quot a in 2016.
Ex hibit 2 1 . List of su ga r r e fining com pa nie s in I ndone sia
Com pa n y
Loca t ion
Ye a r
e st a blish e d
Tot a l
ca pa cit y
( t ons)
PT Angels Product s
Serang, Bant en
1996
500,000
PT Jawam anis Rafinasi ( Wilm ar)
Cilegon, Bant en
2002
160,000
PT Sent ra Usahat am a Jaya
Cilegon, Bant en
2004
540,000
PT Perm at a Dunia Sukses Ut am a
Cigading, Bant en
2005
390,000
PT Dut a Sugar I nt ernat ional (Wilm ar)
Cilegon, Bant en
2005
800,000
PT Dharm apala Usaha Sukses
Cilacap, Cent ral Java
2007
250,000
PT Sugar Labint a
Sout h Lam pung
2007
540,000
PT Makassar Tene
Sout h Sulawesi
2009
200,000
TBLA
Lam pung
2014
212,000
Tot a l
Pr iva t e pla ye r s ca n
im por t
raw
su ga r
r e fine d suga r pr oduct s
only
a nd
W ilm a r gr oup dom ina t e d t he
suga r
r e fining
indust r y,
a ccou nt ing for 2 7 % of t ot a l
indust r y ca pa cit y
3 ,5 9 2 ,0 0 0
Source: Bahana
Ex hibit 2 2 . Tot a l inve st m e nt r e quir e d in 2 0 1 7 F, w or st , ba se a n d be st sce na r ios
D e t a ils
Sugar consum pt ion ( t ons)
Exist ing plant at ion area ( ha)
Exist ing plant at ions yield ( t ons/ ha)
Exist ing sugar ext ract ion rat e ( % )
Exist ing sugar product ion ( t ons)
Sugar deficit ( t ons)
New plant at ion yield ( t ons/ ha)
New extract ion rat e ( % )
Addit ion a l pla nt a t ion a r e a r e qu ir e d ( ha )
Addit ional sugar m ill plant needed ( unit s)
Avg. land cost ( I DRm n/ ha)
Avg. m aint enance cost (I DRm n/ ha)
Sugar m ill capacit y ( t ons)
Sugar m ill capex ( I DRbn)
Tot al land acquiring cost needed (I DRbn)
Tot al m aint enance cost needed (I DRbn)
Tot al sugar m ill capex needed ( I DRbn)
Tot a l cost ( I D Rbn )
W or st
6,976,326
464,981
80
7
2,629,932
4,346,394
Ba se
6,976,326
464,981
80
7
2,603,893
4,372,433
Be st
6,976,326
464,981
90
10
4,184,829
2,791,498
80
7
7 7 6 ,1 4 2
37
90
10
4 8 5 ,8 2 6
37
90
10
3 1 0 ,1 6 6
24
20
25
120,000
1,300
20
25
120,000
1,300
20
25
120,000
1,300
15,522.84
31,028.07
48,100
9 4 ,6 5 1
9,716.52
23,770.17
48,100
8 1 ,5 8 7
6,203.33
19,378.68
31,200
5 6 ,7 8 2
Source: Bahana est im at es
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
I D R8 2 t n
a nd
486k
r e quir e d
t o a ddr e ss
suga r de ficit in 2 0 1 7 F
ha
t he
7 Oct obe r 2 0 1 6
Ex hibit 2 3 . Ra w suga r pr ice a nd I ndone sia ’s suga r floor pr ice , Ja n 0 4 - Se p 1 6
( I DR/ k g)
10,000
Suga r
floor
pr ice
int r oduce d in 2 0 0 4 …
9, 000
fir st
8, 000
7, 000
6, 000
5, 000
4, 000
3, 000
2, 000
1, 000
Raw sugar pr ice
Sep- 16
Jan- 16
May- 16
Sep- 15
Jan- 15
May- 15
Sep- 14
Jan- 14
May- 14
Sep- 13
Jan- 13
May- 13
Sep- 12
Jan- 12
May- 12
Sep- 11
Jan- 11
May- 11
Sep- 10
Jan- 10
May- 10
Sep- 09
Jan- 09
May- 09
Sep- 08
Jan- 08
May- 08
Sep- 07
Jan- 07
May- 07
Sep- 06
Jan- 06
May- 06
Sep- 05
Jan- 05
May- 05
Sep- 04
Jan- 04
May- 04
-
Floor pr ice
Source: Bloom berg, Bahana
Apart from t he plan t o m at ch supply wit h t he dom est ic dem and for sugar in I ndonesia,
t he Governm ent int roduced a sugar floor price ( exhibit 23) t hrough t he issuance of
Minist erial Decree no.527/ 2004 for sugar im port s t o prot ect farm ers from low selling
prices and t o encourage local players in plant ing sugarcane. I ndonesia’s sugar floor
prices are aligned wit h farm ers’ cost of product ion est im at ed by t he Agricult ure Minist ry
( exhibit 24) . Declining yields and increases in land rent al cost s, which cont ribut ed
c.30% of t he t ot al product ion cost , were t he m ain drivers for farm ers’ increase in t he
cost of product ion. Moreover, t he sugar floor price also m oved in line wit h t he increase
in PTPN’s COGS. We believe TBLA, wit h a lower product ion cost com pared t o farm ers’
and PTPN’s product ion cost , is likely t o enj oy supernorm al profit s, w hile t he
inefficiencies in sugar indust ry are being addressed.
… t o pr ot e ct fa r m e r s fr om
low se lling pr ice
Ex hibit 2 4 . Su ga r floor pr ice a nd fa r m e r s’ pr oduct ion cost , 2 0 0 4 - 2 0 1 6
Floor pr ice a ligne d w it h
fa r m e r s’ pr oduct ion cost
( I DR/ k g)
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
2004
2005
2006
2007
2008
2009
Floor pr ice
2010
2011
2012
2013
Farm ers' product ion cost
Source: Bahana, Agricult ure Minist ry
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
2014
2015
2016
7 Oct obe r 2 0 1 6
Ex hibit 2 5 . PTPN ’s COGS a nd su ga r floor pr ice , 2 0 1 0 - 2 0 1 5
( I DR/ k g)
8,900
9, 000
8,500
8, 500
8,100
Suga r floor pr ice a lso m ove s
in line w it h PTPN ’s COGS
8,100
8, 000
7, 500
7,000
7, 000
6, 500
6,350
6,339
6,022
6, 000
5,714
5,628
5,361
5, 500
5, 000
4,475
4, 500
4, 000
2010
2011
2012
2013
PTPN's COGS
2014
2015
Floor pr ice
Source: Bahana, Com pany
Ex hibit 2 6 . Su ga r ca ne pr oduct ion cost , 2 0 1 4
Pr oduct ion cost
Seeds
Fert ilizers
Pest icides
Wages
Land processing
Plant ing shade crops
Plant ing est at e crops
Maint enance
Fert ilizing
Pest cont rolling
Harvest ing
Land rent cost
Equipm ent rent cost
Fuel
Agricult ural services
Ot hers
Pr oduct ion cost - t ot a l
Am ount ( I D Rm n/ ha )
3.1
2.9
0.1
La nd r e nt a l cost a ccoun t s for
3 2 % of t ot a l su ga r ca ne
pr oduct ion cost
0.9
0.0
0.8
2.0
0.7
0.1
1.8
7.8
0.3
0.1
1.2
2.4
2 4 .2
Source: I ndonesia St at ist ics Agency, Bahana
Ex hibit 2 7 . W or ld suga r ca ne pla nt e d a r e a , 2 0 0 0 - 2 0 1 5
( m n t ons)
12.0
( m n t ons)
2.0
1.8
11.0
1.6
10.0
1.4
9.0
1.2
8.0
1.0
7.0
0.8
6.0
0.6
5.0
0.4
4.0
0.2
3.0
2.0
0.0
2007
2008
Thailand
2009
2010
Philippine
2011
I ndonesia
2012
2013
Aust ralia
Source: I ndonesia St at ist ics Agency, FAO, Bahana
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
2014
2015
Br azil ( RHS)
Br a z il
ha d
t he
lar ge st
suga r ca ne pla nt e d a r e a a t
1 0 .9 m n ha in 2 0 1 5 …
7 Oct obe r 2 0 1 6
Ex hibit 2 8 . Top 5 su ga r - pr oducin g cou nt r ie s, 2 0 0 5 - 2 0 1 4
… a nd pr oduce d 7 3 m n t on s
or 4 2 % of globa l pr odu ct ion
( m n t ons)
80
70
60
50
40
30
20
10
2005
2006
2007
2008
Br azil
2009
I ndia
2010
China
2011
2012
Thailand
2013
2014
Pak ist an
Source: Bloom berg
Ex hibit 2 9 . W or ld pr odu ct ivit y yie ld, 2 0 1 5
( t ons/ ha)
Aust r a lia ha d m uch h ighe r
pr oduct ivit y yie ld com pa r e d
t o I ndone sia , give n sim ila r
pla nt a t ion a r e a a t c.4 0 0 k ha
30
25
20
15
10
5
0
2005
2006
2007
2008
Br azil
2009
2010
Thailand
2011
2012
I ndonesia
2013
2014
2015
Aust ralia
Source: USDA, Bloom berg, Bahana
Ex hibit 3 0 . La m pun g r a infa ll da t a , 2 0 0 6 - August 2 0 1 6
(mm)
500
Ra infa ll
is
a ppr oa chin g
a ve r a ge
in
Sum a t r a
450
400
350
300
250
200
150
100
50
0
Jan
Feb
Mar
Apr
May
Max
Jun
Min
Jul
Aug
Mean
Sep
2016
Source: Bahana
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
Oct
Nov
Dec
cur r e nt ly
1 0 - ye a r
La m pun g,
7 Oct obe r 2 0 1 6
Ex hibit 3 1 . Pr odu ct ion cost com pa r ison
( I D R/ k g)
TBLA's w hit e
suga r
TBLA's r e fine d
suga r
TBLA’s pr oduct ion cost for
w hit e suga r is 2 2 % che a pe r
t ha n it s r e fine d pr odu ct , or
2 7 % com pa r e d t o PTPN ’s
PTPN 's w h it e
suga r
Raw m at erial
cost
-
Maint enance
cost
2,402
Product ion cost
2,000
100
3,313
-
550
-
4 ,4 0 2
5 ,6 5 0
6 ,0 2 2
I m port dut y
COGS
5,000
-
2,709
Source: Com pany, Bahana
Ex hibit 3 2 . List of upcom ing su ga r m ill inve st m e nt s in I ndone sia
Com pa ny
Suga r m ill
ca pa cit y ( t ons)
Loca t ion
Sum ba, East Nusa Tenggara
150,000
Sout h Sum at era
150,000
Wilm ar group
Manggarai, East Nusa Tenggara
150,000
MEDC
Papua
Se ve r a l
I ndone sia n
conglom e r a t e s
are
r e por t e dly pla nning t o e nt e r
t he suga r bu sine ss
CPI N, Dj arum and
Wings group
n/ a
Source: Bahana, Bisnis.com
Ex hibit 3 3 . TBLA’s pa lm pla nt a t ion a r e a & a ve r a ge yie ld, 2 0 1 3 - 2 0 1 8 F
( ha)
( t ons/ ha)
17
57,000
56,474
16
56,000
15
55,000
14
54,158
53,758
53,751
54,000
13
53,258
12
52,895
53,000
11
52,000
10
51,000
9
2013
2014
2015
Palm plant ed area
2016F
2017F
Av erage y ield ( RHS)
Source: Com pany, Bahana
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
2018F
Yie ld e x pe ct e d t o incr e a se
post La N ina
7 Oct obe r 2 0 1 6
Ex hibit 3 4 . TBLA r e ve nu e cont r ibu t ion pe r se gm e nt , 2 0 1 4 - 2 0 1 8 F
( I DRbn)
10,000
Suga r busine ss t o cont r ibut e
3 7 % of t ot a l r e ve nue in
2017F
9, 000
-
8, 000
3,297
7, 000
2,996
277
42
884
6, 000
144
600
5, 000
2,200
4, 000
6,168
3, 000
5,412
5,185
4,587
2, 000
4,132
1, 000
2014
2015
2016F
Palm oil product s
Sugar product s
2017F
2018F
Ot hers
Source: Bahana, Com pany
Ex hibit 3 5 . Su ga r vs. CPO gr oss pr ofit pe r t on, 2 0 1 7 F
Suga r
( I D Rm n / ha )
W or st
Yield ( t ons/ ha)
Ba se
CPO
Be st
W or st
Ba se
Be st
8.5
8.5
8.5
4.5
4.5
4.5
Price (I DRk/ t on)
9,100
10,000
12,500
5,980
9,000
13,000
Price less 10% VAT ( I DRk/ t on)
8,190
9,000
11,250
Revenue
69.6
76.5
95.6
26.9
40.5
58.5
Plant ing & m aint enance cost
20.0
20.0
20.0
15.0
15.0
15.0
Processing cost
20.0
20.0
20.0
5.0
5.0
5.0
Gross profit
29.6
36.5
55.6
6.9
20.5
38.5
Unde r a ba se ca se sce na r io,
suga r pr ovide s 7 8 % highe r
gr oss
pr ofit
pe r
t on
com pa r e d t o CPO
Source: Bahana est im at es
Ex hibit 3 6 . TBLA’s suga r ca ne pla nt e d a r e a & a ve r a ge a ge , 2 0 1 2 - 2 0 1 8 F
( y ears)
( ha)
20,000
4.0
17,993
18,000
3.6
16,000
3.2
14,424
14,000
2.8
11,326
12,000
2.4
10,000
2.0
7,326
8, 000
1.6
6, 000
3,913
1.2
4, 000
2, 000
1,305
1,133
2012
2013
0.8
-
0.4
2014
2015
Tot al plant ed area
2016F
2017F
Av erage age ( RHS)
Source: Com pany, Bahana
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
2018F
TBLA’s
t ot a l
suga r ca ne
pla nt e d a r e a t o r e a ch 1 7 .9 k
ha by 2 0 1 8 F
7 Oct obe r 2 0 1 6
Ex hibit 3 7 . TBLA’s suga r ca ne pla nt a t ion in Te r ba nggi, La m pun g
Suga r ca ne
w as
be ing
ha r ve st e d, w hile w e visit e d
Source: Bahana
Ex hibit 3 8 . TBLA’s suga r ca ne pla nt a t ion, m ill & r e fine r y loca t ion
The 1 2 0 k - t on suga r m ill
pla nt is st r a t e gica lly loca t e d
w it hin
t he
com pa ny’s
suga r ca ne pla n t a t ion a r e a
Source: Com pany
Ex hibit 3 9 . TBLA’s se a por t a t W a y Lunik , La m pung
Pr iva t e
se a por t
w it h
6 0 0 t ons/ hou r
loa ding
ca pa cit y, e a sin g dist r ibut ion
bot t le ne ck t o la r ge m a r k e t in
Ja va a nd Sum a t e r a
Source: Com pany
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
7 Oct obe r 2 0 1 6
Ex hibit 4 0 . TBLA’s suga r m ill pla nt is ne a r com ple t ion
The su ga r m ill pla nt w ill
com m e nce it s ope r a t ion in
e a r ly 2 0 1 7 , …
Source: Bahana
Ex hibit 4 1 . I n side t he suga r m ill pla nt
… fe a t ur ing 5 - st a ge m illing
pr oce ss …
Source: Bahana
Ex hibit 4 2 . Va cuu m boile r s
… a nd va cuum boile r s t o
suppor t
high
suga r
e x t r a ct ion r a t e a t 1 0 % in
2017F
Source: Bahana
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
7 Oct obe r 2 0 1 6
Ex hibit 4 3 . TBLA’s suga r r e fine r y pla nt
Suga r
r e fine r y
w it h
pr oduct ion ca pa cit y of 2 1 6 k
t on s p.a .
Source: Bahana
Ex hibit 4 4 . TBLA’s im por t e d r a w suga r inve nt or y
2 0 k t on s of r a w
im por t e d fr om Br a z il
suga r
Source: Bahana
Ex hibit 4 5 . I m por t e d r a w suga r , be for e a n d a ft e r r e fining pr oce ss
Re fining pr oce ss r e sult s in
w hit e
color
a nd
h ighe r
sucr ose cont e nt of a bove
9 9 % for suga r
Source: Bahana
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
7 Oct obe r 2 0 1 6
Ex hibit 4 6 . Su m - of- t he - pa r t s va lua t ion
Se gm e nt s
N e t pr of it ( I D Rbn)
M e t hod
Va lu e
Palm oil business
409.9
2017F PE of 9.0x
3,689
Sugar m ill business
267.3
2017F PE of 13.5x
3,608
Sugar r efinery business
213.9
2017F PE of 2.5x
214
Tot al value ( I DRbn)
7,833
Shares out st anding ( m n)
5,342
Va lu e / Sha r e ( I D R)
1 ,4 7 0
Source: Bahana forecast s
Ex hibit 4 7 . Pe e r s com pa r ison, 2 0 1 6 F- 2 0 1 7 F
CPO b u sin e ss
ASTRA AGRO LESTARI TBK PT
SALI M I VOMAS PRATAMA TBK PT
SAMPOERNA AGRO TBK PT
TUNAS BARU LAMPUNG TBK PT
PP LONDON SUMATRA I NDONES PT
SI ME DARBY BERHAD
I OI CORP BHD
KUALA LUMPUR KEPONG BHD
GENTI NG PLANTATI ONS BHD
Su g a r m ill b u sin e ss
KHON KAEN SUGAR I NDUSTRY PCL
BURI RAM SUGAR PCL
NANNI NG SUGAR I NDUSTRY CO - A
ROGERS SUGAR I NC
Su g a r r e f in e r y b u sin e ss
DANGOTE SUGAR REFI NERY PLC
W e ig h t e d Av e r a g e
Source: Bloom berg, Bahana Not e:
Ma r k e t ca p
PER ( x )
( USDb )
2016F
2017F
3 1 .3
2 7 .1
2 2 .1
2.3
18.8
15.4
0.6
17.3
12.9
0.3
14.5
11.7
0.4
8.1
6.1
0.8
19.9
14.2
12.0
31.2
22.9
6.7
26.2
24.8
6.2
24.4
22.5
2.0
34.0
25.1
2 .3
9 3 .0
2 2 .9
0.5
20.6
16.5
0.2
22.2
18.2
1.1
175.8
30.3
0.5
14.8
15.1
0 .2
6 .0
5 .0
0.2
6.0
5.0
3 3 .8
1 2 6 .1
5 0 .0
Pricing as of 7 Oct ober 2016
PBV ( x )
2016F
2017F
2 .6
2 .3
1.8
1.7
0.5
0.5
1.1
1.0
1.3
1.4
1.4
1.3
1.6
1.5
5.3
4.1
2.5
2.4
1.9
1.8
2 .8
2 .5
1.3
1.2
3.6
3.4
4.6
4.0
na
na
1 .2
1 .1
1.2
1.1
6 .5
5 .8
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
EV/ EBI T DA ( x )
2016F
2017F
1 6 .0
1 4 .0
10.4
8.6
6.5
5.7
9.4
6.8
9.4
6.3
9.9
7.6
16.1
14.0
19.2
16.9
15.2
14.3
20.9
16.6
7 .2
6 .0
12.7
11.4
21.5
14.0
na
na
10.9
9.9
2 .3
2 .0
2.3
2.0
2 5 .5
2 1 .9
Div . y ie ld ( % )
2016F
2017F
2 .3
2 .7
1.8
2.5
2.1
2.5
1.2
1.8
3.7
7.0
2.0
2.2
2.6
3.1
2.2
2.4
2.4
2.5
0.7
0.9
2 .0
2 .3
3.2
4.4
2.1
1.7
na
na
5.5
5.5
9 .1
1 1 .2
9.1
11.2
1 3 .3
1 6 .2
ROE ( % )
2016F
2017F
9 .9
1 0 .5
10.5
11.6
2.9
3.8
7.6
9.3
16.4
25.6
6.7
9.0
5.3
6.7
18.9
16.7
11.2
11.9
5.3
7.0
5 .7
9 .6
5.5
7.9
16.4
17.8
5.9
12.7
na
na
1 9 .9
1 8 .3
19.9
18.3
3 5 .5
3 8 .4
7 Oct obe r 2 0 1 6
Tuna s Ba r u La m pun g
Ye a r t o 3 1 D e ce m be r
PROFI T & LOSS ( I D Rbn )
Sa le s
Gr oss pr ofit
EBI TDA
Depreciat ion
EBI T
Net int erest inc./ ( expense)
Forex gain/ ( losses)
Ot her incom e/ ( expense)
Pr e - t a x pr ofit
Taxes
Minorit y int erest
N e t profit
2014
2015
2016F
2017F
2018F
6 ,3 3 8
1 ,2 9 3
1 ,0 6 5
270
795
( 201)
( 105)
73
562
( 126)
( 3)
433
5 ,3 3 1
1 ,1 7 0
598
( 6)
604
( 219)
( 165)
43
263
( 62)
( 4)
197
6 ,6 0 9
1 ,4 5 2
999
217
782
( 236)
34
50
630
( 126)
( 4)
500
8 ,1 8 1
2 ,1 8 7
1 ,6 1 9
285
1 ,3 3 4
( 278)
62
1 ,1 1 9
( 224)
( 4)
891
9 ,4 6 5
2 ,5 5 5
1 ,9 8 8
337
1 ,6 5 1
( 308)
72
1 ,4 1 5
( 283)
( 4)
1 ,1 2 8
BALAN CE SH EET ( I D Rbn )
Cash and equivalent s
Trade receivables
I nvent ories
Fixed asset s
Ot her asset s
Tot a l a sse t s
I nt erest bearing liabilit ies
Trade payables
Ot her liabilit ies
Tot a l lia bilit ie s
Minorit y int erest
Sha r e h olde r s' e qu it y
520
711
956
2,843
2,288
7 ,3 2 8
3,194
292
1,388
4 ,8 7 5
18
2 ,4 3 6
296
797
1,146
4,442
2,601
9 ,2 9 3
4,690
330
1,386
6 ,4 0 6
21
2 ,8 6 6
799
575
937
5,337
2,551
1 0 ,2 0 8
4,887
297
1,778
6 ,9 6 2
26
3 ,2 1 9
662
858
1,264
6,144
3,074
1 2 ,0 1 2
5,687
371
2,186
8 ,2 4 4
33
3 ,7 3 6
650
981
1,389
6,765
3,637
1 3 ,4 3 3
6,287
406
2,506
9 ,1 9 9
38
4 ,1 9 6
CASH FLOW ( I D Rbn )
EBI T
Depreciat ion
Working capit al
Ot her operat ing it em s
Ope r a t in g ca sh flow
Net capit al expendit ure
Fr e e ca sh flow
Equit y raised/ ( bought )
Net borrowings
Ot her financing
N e t ca sh flow
Cash flow at beginning
Ca sh flow a t e n d
795
270
( 308)
( 214)
543
( 999)
( 455)
289
105
( 67)
( 128)
648
520
604
( 6)
( 0)
( 517)
80
( 713)
( 632)
( 5)
360
161
( 116)
520
296
782
217
629
166
1 ,7 9 4
( 1,345)
450
195
( 142)
503
296
799
1,334
285
( 619)
( 150)
850
( 1,420)
( 569)
801
( 369)
( 136)
799
662
1,651
337
( 299)
( 270)
1 ,4 1 9
( 1,368)
51
600
( 663)
(12)
662
650
20.5
6.4
20.4
16.0
12.5
6.8
70.3
1.1
2.6
109.8
43.6
32
17
63
7.4
2.4
22.0
15.4
11.3
3.7
28.3
1.1
3.8
153.3
50.5
58
27
94
16.4
5.1
22.0
15.1
11.8
7.6
75.0
0.7
2.7
127.0
47.9
32
21
66
25.6
8.0
26.7
20.2
16.3
10.9
75.0
0.8
3.2
134.5
47.3
38
23
77
28.5
8.9
27.0
21.5
17.4
11.9
75.0
0.8
4.7
134.3
46.8
38
21
73
719
( 3)
214
1
9,000
1,133
na
11,875
542
( 25)
296
38
7,500
3,913
na
13,393
462
( 15)
213
( 28)
8,000
7,326
11,000
13,400
527
14
261
22
8,923
11,326
10,000
13,000
577
9
299
14
9,538
14,424
10,000
13,000
RATI OS
ROAE ( % )
ROAA ( % )
Gross m argin ( % )
EBI TDA m argin ( % )
EBI T m argin ( % )
Net m argin ( % )
Payout rat io ( % )
Current rat io ( x)
I nt erest coverage ( x)
Net gearing ( % )
Debt s t o asset s ( % )
Debtor t urnover ( days)
Credit or t urnover ( days)
I nvent ory t urnover ( days)
M AJOR ASSUM PTI ON S
FFB product ion ( k tons)
Growt h ( % )
CPO product ion ( k t ons)
Growt h ( % )
ASP CPO ( I DR/ kg)
Sugar plant at ion ( ha)
ASP Sugar (I DR/ kg)
Avg. exchg. rat e (I DR/ USD)
Source: Com pany, Bahana est im at es
Gregorius Gary ( gregorius@bahana.co.id) + 6221 250 5081 ext . 3604
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
2017F
r e ve nue
at
I D R8 ,1 8 1 bn, + 2 3 .8 % y - y on
a cce le r a t e d
cont r ibut ion
fr om su ga r busine ss
I ncr e a sin g de bt le ve ls …
… t o fina nce e x pa nsion of
it s pa lm
a nd suga r ca ne
pla nt a t ions
I m pr ove d m a r gin s in 2 0 1 7 F
a s a r e sult of r e cover y in
CPO pr ice s
FFB pr oduct ion t o r e cove r in
2 0 1 7 - 1 8 F post La N ina
Re se a r ch : + 6 2 2 1 2 5 0 5 0 8 1
H a r r y Su
harry.su@bahana.co.id
Senior Associat e Direct or
Head of St rat egy & Research
ext 3600
direct : + 62 21 250 5735
Sa n n i Sa t r io D w i Ut om o
sanni@bahana.co.id
Research Analyst
I ndust rial Est at es, Propert y
ext 3611
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wafi@bahana.co.id
Technical Analyst
ext 3609
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Research Associat e
ext 3623
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St rat egist and Product Head
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Consum er, Healt hcare
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Sm all Caps
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ext 3602
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Transport at ion, Plant at ions
ext 3604
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ext 3612
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CA
ext 3618
D e a lin g Room : + 6 2 2 1 5 2 7 0 8 0 8
N a t a lia Su r j a dipu t r a
nat alia@bahana.co.id
Direct or of Sales &
Client Relat ionship Managem ent
ext 2500
Alvin Gu n a w a n
alvin.gunawan@bahana.co.id
I nst it ut ional Equit y Sales
ext 2591
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nara.j oesoef@bahana.co.id
I nst it ut ional Equit y Sales
ext 2592
H e ad Office
Graha Niaga, 19t h Floor
Jl. Jend. Sudirm an Kav. 58
Jakart a 12190
I ndonesia
Tel. 62 21 250 5081
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+ 6 2 3 1 5 3 5 2 7 8 8 ( Su r a ba ya Br a n ch )
Ka r t ik a Su t a n di, CFA
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ext 2590
Ash ish Agr a w a l
ashish@bahana.co.id
Vice President
I nst it ut ional Equit y Sales
ext 2550 / 2553
Br a m Ta a r e a
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I nst it ut ional Equit y Sales
ext 2524
Su w a r di W idj a j a
Suwardi@bahana.co.id
I nst it ut ional Equit y Sales
ext 2548
H a n n a M a r ion da
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Sales Trader
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Sales Execut ive
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Manager, Surabaya Branch
ext 7250
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dasaad@bahana.co.id
I nst it ut ional Equit y Sales
ext 2549
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I ndonesia
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Ja pa n
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I nvest m ent Bank ing Relat ionship
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Capit al Market s Europe’s affiliat
Asiamoney’s
2013
Best Domestic
Equity House
7 Oct obe r 2 0 1 6
Tu na s Ba r u La m pu ng
BUY
Sect or: Plant at ions ( Neut ral)
( unchanged)
Rat ing m om ent um * :
Gr e gor iu s Ga r y
PX: I DR1,010–TP: I DR1,470 (from I DR1,180)
TP/ consensus: 110% ; TP m om ent um * :
JCI : 5,377
E- m ail: gregorius@bahana.co.id
Phone: + 6221 250 5081 ext . 3604
Suga r r ush
Be ne ficia r y of 4 m n- t on st r u ct ur a l de ficit in dom e st ic suga r indust r y:
On t he back of a m aj or sugar expansion, TBLA is likely t o benefit from
I ndonesia’s penchant for sweet s wit h sugar per capit a consum pt ion of 23 kg
( exhibit 16) , one of t he highest in t he world. Dom est ically, we see a huge
st ruct ural deficit of 4m n t ons ( exhibit 17) wit h consum pt ion of 6.5m n t ons
and product ion of j ust 2.5m n t ons from 9 sugar- producing regions. This has
result ed in I ndonesia becom ing one of t he world’s largest sugar im port ers,
bringing in 3m n t ons of sugar annually ( exhibit 20) . I n t he past 35 years, t he
sugar deficit widened significant ly as dom est ic dem and out st ripped
product ion wit h sugarcane plant ing areas experiencing only 1.1% CAGR in
1980- 2015. Furt herm ore, product ivit y was low averaging 5.6 t ons/ ha,
im plying t he absence of sizeable invest m ent s wit hin t he local sugar indust ry.
Subst a n t ia l t im e r e quir e d t o cr e a t e a se lf- sufficie nt indust r y: The
governm ent aim s for I ndonesia t o achieve sugar self- sufficiency by 2019.
However, on lim it ed land availabilit y and m assive invest m ent requirem ent of
I DR82t n ( exhibit 22) , t his sugar self- sufficiency plan is unlikely t o be realized
given t he required addit ional plant ing areas of 486k ha, even higher t han t he
current plant ed area of 456k ha. Hence, we expect t he sugar deficit t o
persist over t he long t erm , allowing bot h im port ers and plant ers like TBLA t o
benefit from cont inued undersupply condit ions.
Lik e ly t o book st r on g gr ow t h on indust r y ine fficie ncy: I n an effort t o
prot ect farm ers and encourage local players t o ent er t he sugar business, t he
governm ent has set t he sugar floor price at alm ost t wice t hat of t he
int ernat ional raw sugar price ( exhibit 23) . I ndonesia’s sugar floor price refers
t o farm ers’ cost of product ion as est im at ed by t he Agricult ure Minist ry.
TBLA’s 2017F product ion cost is at I DR4,402/ kg, 27% lower t han t he
indust ry’s average of I DR6,022/ kg and 50% lower t han t he average farm er’s
cost of product ion of I DR8,790/ kg ( exhibit 24) . That said, TBLA should enj oy
st rong 2017F net earnings of I DR891bn, + 78% y- y, due t o indust r y
inefficiency. I t is wort h not ing t hat TBLA experiences 83% higher yields of
I DR36.5m n/ ha from sugar , versus I DR20.5m n/ ha for CPO ( exhibit 35) .
W e e x pe ct a st r ong 7 9 % EPS CAGR in 2 0 1 5 - 1 8 F; Ra ise d TP
We now expect higher sust ainabilit y for TBLA’s sugar refinery and sugar m ill
businesses. Based on t he governm ent ’s recent discussions t o allow refined
sugar t o be sold at t he ret ail level, coupled wit h plans t o prohibit im port ers
lacking sugarcane plant at ions from obt aining im port perm it s, we believe TBLA’s
sugar refinery business t o be m ore sust ainable, booking 2017F earnings of
I DR214bn, 24% of t he t ot al. As such, we now raise our t arget PE for t he sugar
refinery business from 1x t o 2.5x, st ill a 50% discount t o t he regional pure
refinery player. This gives a higher 12M SOTP- based TP of I DR1,470 ( exhibit
46) , reflect ing 46% upside pot ent ial. Wit h t his and t he posit ive sent im ent from
TBLA’s CPO segm ent wit h a higher average 2017F CPO price of USD750/ m t
( 2016: USD625/ m t ) , t he st ock’s st rong m arket out perform ance ( exhibit 4) is
likely t o persist . BUY. Risk s: Delays in t he com plet ion of TBLA’s sugar m ills as
well as policy risks st em m ing from lower im port quot as and sugar price ceiling.
Ex hibit 1 . Com pa n y inform a t ion
Market cap ( I DRb/ USDm )
:
3M avg.daily t .o.( I DRb/ USDm )
:
Bloom berg code
:
5,395.5/ 414.4
5,247.7/ 404.1
TBLA I J
Source: Bloom berg
Ex hibit 2 . Sha r eh olde r s in form at ion
Budi Delt a Sw akarya ( % )
:
Sungai Budi ( % )
:
Ot hers ( % )
:
Free float ( % )
:
27.80
26.49
1.47
45.62
Source: Bloom berg
Ex hibit 3 . Ke y fore ca st s an d va lu at ion s
2015 2016F 2017F
Ye a r t o 3 1 D e c
Revenue ( I DRbn)
5,331
6,609 8,181
EBI T ( I DRt n)
604
782 1,334
Net profit ( I DRbn)
197
500
891
Bahana/ cns. ( % )
74
99
EPS ( I DR)
37
94
167
EPS growt h ( % )
( 58)
154
78
EV/ EBI TDA ( x)
11.8
9.4
6.3
PER ( x)
27.4
8.1
6.1
FCFPS ( I DR)
( 0)
0
( 0)
FCF yield ( % )
( 0.0)
0.0
( 0.0)
BVPS ( I DR)
536
603
699
PBV ( x)
1.9
1.3
1.4
DPS ( I DR)
23
28
70
Yield ( % )
2.3
3.7
7.0
ROAA ( % )
2.4
5.1
8.0
ROAE ( % )
7.4
16.4
25.6
EBI T m argin ( % )
11.3
11.8
16.3
Net gearing ( % )
153.3
127.0 134.5
2018F
9,465
1,651
1,128
119
211
27
5.4
4.8
0
0.0
785
1.3
125
12.4
8.9
28.5
17.4
134.3
Source: Bloom berg, Bahana est im at es
Not e: Pricing as of close on 7 Oct ober 2016
Ex hibit 4 . Rela t ive sh a re price pe r for m a n ce
(% )
(% )
100
90
89.2
81.0
81.0
80
60
90
80
69.0
70
100
70
60
51.1
50
50
40
40
30
30
18.2
20
20
10
10
0
0
yt d
1M
3M
6M
9M
12M
TBLA I J r elat ive t o JCI
Source: Bloom berg, Bahana
Ex hibit 5 . Rela t ive pe rform an ce t o JCI , yt d
(% )
105
(% )
98.0
105
85
85
65
65
47.0
45
45
21.5
25
16.7
14.8
25
12.4
1.5
5
5
( 15)
( 15)
( 35)
( 33.3)
( 55)
( 35)
( 55)
TBLA
SI MP
ANJT
Sect or
LSI P
SGRO
AALI
DSNG
Source: Bloom berg, Bahana
Disclosure: Bahana Securit ies does and seeks t o do business wit h com panies covered in it s research report s. I nvest ors should consider t his report as only a single fact or in
m aking t heir invest m ent decision.
Please see t he im port ant disclaim er inform at ion on t he back of t his r eport
*Based on consensus’ recent changes ↑ (up), ↓ (down), ↔ (unchanged)
7 Oct obe r 2 0 1 6
SUGAR I N D USTRY OVERVI EW
There are current ly 9 sugar- producing regions in I ndonesia ( exhibit 7) : Nort h
Sum at era, Sout h Sum at era, Lam pung, West Java, Cent ral Java, Jogj akart a, East Java,
Goront alo and Sout h Sulawesi. East Java was t he largest sugar- producing province in
t he count ry as of 2015, w it h product ion of 1.24m n t ons or around 50% of t ot al sugar
product ion. East Java had t he largest sugarcane plant ed area of 207k ha as of 2015.
Lam pung was t he second- largest sugar producer, wit h 757k t ons of sugar product ion
and a t ot al plant ed area of 125k ha. From a t ot al sugarcane plant at ion area of 456k ha,
I ndonesia produced around 2.5m n t ons of sugar for bot h dom est ic and overseas
consum pt ion.
9 suga r - pr oducing r e gions in
I ndone sia ge ne r a t e d 2 .5 m n
t on s of suga r a s of 2 0 1 5
Ex hibit 6 . I ndone sia ’s 5 la r ge st suga r - pr odu cing pr ovince s, 2 0 1 5
Ea st Ja va w a s t he lar ge st
suga r - pr oducing pr ovin ce …
Source: I ndonesia St at ist ics Agency
Ex hibit 7 . Su ga r ca ne pla nt a t ion a r e a m a p, 2 0 1 5
… suppor t e d by t he la r ge st
pla nt a t ion a r e a of 2 0 7 k ha
Source: I ndonesia St at ist ics Agency
I ndonesia’s sugar indust ry developm ent has occurred at a slow pace. During t he past
35 years, dom est ic sugar product ion only saw a 2% CAGR, from 1.3m n t ons in 1980 t o
2.5m n t ons in 2015 ( exhibit 8) . Slow dom est ic sugar product ion growt h occurred
m ainly due t o low growt h in sugarcane plant ed area developm ent , which only saw a
1.1% CAGR, from 316k ha in 1980 t o 456k ha in 2015. Moreover, sugarcane
product ivit y yields in I ndonesia have not seen m uch im provem ent during t his t im e. The
product ivit y yield was only at 5.6t ons/ ha as of 2015 ( exhibit 9) , im plying inefficiencies
in t he sugar product ion process. These t wo fact ors have result ed in low sugar
product ion growt h.
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
Suga r indu st r y de ve lopm e nt
ha s occur r e d a t a slow pa ce
…
7 Oct obe r 2 0 1 6
Ex hibit 8 . D om e st ic su ga r pr oduct ion, 1 9 8 0 - 2 0 1 5
( m n t ons)
2.8
… w it h only a 2 % CAGR for
dom e st ic suga r pr oduct ion
2.6
2.4
2.2
2.0
1.8
1.6
1.4
1.2
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1.0
Source: I ndonesia St at ist ics Agency, Bahana
Ex hibit 9 . Su ga r ca ne pla nt e d a r e a a nd pr oduct iv it y yields, 1 9 8 0 - 2 0 1 5
( t ons/ ha)
( ha)
500,000
7. 0
480,000
6. 5
Only a 1 .1 % CAGR for t ot a l
pla nt e d a r e a s dur in g t he
pe r iod, w it h low pr oduct ivit y
of 5 .6 t on/ ha a s of 2 0 1 5
460,000
6. 0
440,000
5. 5
420,000
400,000
5. 0
380,000
4. 5
360,000
4. 0
340,000
3. 5
320,000
300,000
Sugarcane plant ed ar ea
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
3. 0
Pr oduct iv it y yield ( RHS)
Source: I ndonesia St at ist ics Agency, Bahana
Ex hibit 1 0 . Su ga r ca ne a r e a ow ne r ship br e a k dow n, 1 9 8 0 - 2 0 1 5
M a j or it y
of
suga r ca ne
pla nt a t ions
ow ne d
by
sm a llholde r s
( ha)
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
Sm allholder
Gover nm ent plant at ion
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
-
Pr ivat e plant at ion
Source: I ndonesia St at ist ics Agency, Bahana; Sm allholder: owner of sm all far m s ( 20 ha or less) , usually t o
support a single fam ily
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
7 Oct obe r 2 0 1 6
Ex hibit 1 1 . Su ga r ca ne pr oduct ivit y yie ld br e a k dow n by ow ne r ship, 1 9 8 0 - 2 0 1 5
Pr iva t e
se ct or
fe a t ur e s
highe r pr oduct ivit y yield …
Source: I ndonesia St at ist ics Agency, Bahana
Privat e plant at ions, which cont ribut ed 30% of I ndonesia’s overall plant at ion area as of
2015, have t he highest product ivit y yields ( exhibit 11) com pared t o t he governm ent
and sm allholdings, at 5.9 t ons/ ha, wit h t he sm allholdings yield at 5.3 t ons/ ha and t he
governm ent ’s yield at only 4.5 t ons/ ha. We t hink t his im plies t hat t he governm ent has
not invest ed in t he sugar indust ry sufficient ly t o increase product ivit y. Furt herm ore,
underinvest m ent has creat ed inefficiency, which has result ed in high product ion cost s.
On average, t he I ndonesia sugar indust ry, represent ed by Perkebunan Nusant ara
( PTPN) as st at e- owned sugar producers, had an average product ion cost at
I DR6,022/ kg in 2015 while privat e plant at ions such as TBLA had 27% lower product ion
cost s of I DR4,402/ kg due t o higher plant at ion yields and ext ract ion rat es.
… a t 5 .9 t on s/ ha w hile
gove r nm e nt pla nt a t ion yie ld
is only 4 .5 t on s/ ha
Ex hibit 1 2 . Su ga r pr odu ct ion cost , TBLA ve r su s indust r y, 2 0 1 5
( I DR/ k g)
6,500
6,022
TBLA’s pr odu ct ion cost w a s
27%
low e r
t ha n
t he
indust r y’s in 2 0 1 5
6,000
5,500
5,000
4,500
4,402
4,000
3,500
TBLA
I ndust r y
Source: Bahana, Com pany
Problem s in developing sugarcane plant at ion areas arise from difficult ies in finding a
suit able region, as t he plant at ion area needs t o be close t o t he sugar m ill t o preserve
t he sugarcane from det eriorat ion. As of 2015, 57 out of 69 sugar m ills in operat ion
were concent rat ed in t he Java region ( exhibit 13) , where no available land was left t o
increase t he sugarcane plant at ion area. I n addit ion, I ndonesia has suffered from low
ext ract ion rat es as m ost sugar m ills use obsolet e t echnology. Of t he 69 m ills, a t ot al of
47 sugar m ills, cont ribut ing 61% of t ot al m illing capacit y ( exhibit 15) , were built during
Dut ch colonial t im es ( exhibit 14) and have not m ade t echnological im provem ent s t o
increase product ivit y.
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
Lim it e d
a va ila bilit y
suga r ca ne pla nt a t ion
hinde r s e x pa n sion
of
area
7 Oct obe r 2 0 1 6
Ex hibit 1 3 . Su ga r m ill loca t ions
5 7 out of 6 9 suga r m ills a r e
loca t e d in t he Ja va r e gion
2
1
1
1
4
3
8
15
1
33
Num ber of sugar m ill
wit hin t he region
Source: Bahana
Ex hibit 1 4 . W a t oe t oe lis suga r m ill pla nt , Ea st Ja va
St a t e - ow ne d
PTPN ’s
W a t oe t oe lis su ga r m ill w a s
built
in
1839
a nd
st ill
ope r a t e s w it h out a ny m a j or
cha n ge s
to
im pr ove
e fficie ncy
Source: Bahana
Ex hibit 1 5 . I n done sia su ga r m ills: a ge a nd m illing ca pa cit y br e a k dow n, 2 0 1 5
Age
( ye a r s)
0- 25
N um be r of
pla nt s
Pe r ce nt a ge
(% )
M illin g ca pa cit y
( t cd)
5
7.2
29,928
14
20.3
43,195
3
4.3
9,256
> 100
47
68.1
130,510
Tot a l
69
100
2 1 2 ,8 8 8
26- 50
50- 100
Source: Bahana
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
68%
of
su ga r
m ills in
I ndone sia , cont r ibut in g 6 1 %
m illing ca pa cit y, a r e m or e
t ha n 1 0 0 ye a r s old
7 Oct obe r 2 0 1 6
Ex hibit 1 6 . Globa l su ga r consum pt ion pe r ca pit a , 2 0 1 5
( k g/ capit a)
60
I ndone sia
ha s
t he
8th
la r ge st pe r ca pit a suga r
consum pt ion in t he w or ld
55
50
39
38
40
37
34
33
30
23
23
21
20
12
10
0
Br azil
Russia
Mex ico
EU
Egypt
US
Pak ist an
I ndonesia
I ndia
China
Source: USDA, Bahana
Ex hibit 1 7 . I n done sia su ga r pr oduct ion a nd consum pt ion, 1 9 9 7 - 2 0 1 5
( m n t ons)
7.0
6.2
6.0
5.1
5.0
5.5
5.6
2.3
2.2
5.6
6.5
5.8
5.3
Suga r de ficit due t o lim it e d
de ve lopm e nt
of
suga r
pr oduct ion
out pa ce d
by
consum pt ion gr ow t h
4.5
4.3
4.0
3.1
3.1
3.3
3.5
3.6
3.7
3.8
3.9
3.9
2.6
3.0
2.2
2.0
2.1
1.5
1.5
1.7
1.7
1.8
2.2
2.6
2.6
2.3
2.1
2.6
2.6
2.5
1.6
1.0
0.0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Consum pt ion
Pr oduct ion
Source: Bloom berg, Bahana
On t he ot her hand, I ndonesia is one of 10 count ries wit h t he highest sugar
consum pt ion at 23 kg/ capit a in 2015 ( exhibit 16) . Dom est ic sugar consum pt ion
doubled from 3.1m n t ons in 1997 t o 6.5m n t ons, for an 18- year CAGR of 10.1% . The
rapid growt h of sugar consum pt ion, which has out paced t he lim it ed developm ent of
sugar product ion, has creat ed a st ruct ural deficit in I ndonesia’s sugar indust ry. The
deficit has worsened over t im e from 850k t ons in 1997 t o 4m n t ons in 2015, creat ing a
significant gap ( exhibit 17) . The prolonged undersupply condit ions in t he sugar m arket
also have driven t he average ret ail price from I DR10,400/ kg in June 2011 t o as high as
I DR16,200/ kg in July 2016 ( exhibit 18) .
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
W ide ning suga r de ficit ha s
dr ive n r e t a il pr ice …
7 Oct obe r 2 0 1 6
Ex hibit 1 8 . I n done sia ’s suga r r e t a il pr ice a nd floor pr ice , Ja n 2 0 1 1 - Aug 2 0 1 6
( I DR/ k g)
…
to
5 - ye a r
high
at
I D R1 6 ,2 0 0 / k g in July 2 0 1 6
18,000
16,000
14,000
12,000
10,000
8,000
Av erage r et ail price
Jul- 16
May- 16
Jan- 16
Mar - 16
Nov- 15
Jul- 15
Sep- 15
May- 15
Jan- 15
Mar - 15
Nov- 14
Jul- 14
Sep- 14
May- 14
Jan- 14
Mar - 14
Nov- 13
Jul- 13
Sep- 13
May- 13
Jan- 13
Mar - 13
Nov- 12
Jul- 12
Sep- 12
May- 12
Jan- 12
Mar - 12
Nov- 11
Jul- 11
Sep- 11
May- 11
Jan- 11
Mar - 11
6,000
Floor pr ice
Source: Bahana, Bloom berg
Ex hibit 1 9 . I n done sia su ga r indu st r y br e a k dow n
Sugarcane
Sugar
mill
White sugar (for
retail)
Imported
raw sugar
Sugar
refinery
Refined sugar
(for industry)
I ndone sia ’s su ga r indust r y is
divide d int o 2 se gm e nt s:
w hit e
su ga r
for
r e t a il
consum pt ion
a nd
r e fine d
suga r for F& B indust r y
Source: Com pany, Bahana
Ex hibit 2 0 . I n done sia su ga r im por t volum e , 1 9 9 7 - 2 0 1 5
( m n t ons)
4.0
3.4
3.3
3.5
3.0
2.9
3.0
2.7
2.4
2.5
2.0
2.0
1.5
1.4
1.5
0.8
1.0
1.4
1.3
1.0
1.0
1.4
1.4
1.1
1.0
0.6
0.5
0.0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: I ndonesia St at ist ics Agency
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
I ndone sia is de pe nde nt on
suga r
im por t s
to
fulfil
consum pt ion
7 Oct obe r 2 0 1 6
I ndonesia relies heavily on sugar im port s ( exhibit 20) t o fulfil t he dom est ic dem and
and t o cont rol t he m arket price am id sugar short ages. As st ipulat ed under Law
no.117/ 2015, privat e players can im port raw sugar and refined sugar aft er obt aining
approval from Trade Minist ry, while only SOEs can im port whit e sugar. Raw sugar,
m ainly im port ed from Brazil, I ndia, China and Thailand, is used as a raw m at erial t o
produce refined sugar for t he F&B indust ry ( exhibit 19) . The Governm ent also
m aint ains im port quot as t o develop t he dom est ic sugar indust ry and at t ain selfsufficiency in sugar product ion. The quot a is shared by I ndonesia’s 8 sugar refining
com panies wit h a t ot al product ion capacit y of 3.6m n t ons, and Wilm ar group dom inat es
t he quot a wit h 960k t ons, or 27% of t he t ot al capacit y. TBLA obt ained 262k t on of t he
sugar im port quot a in 2016.
Ex hibit 2 1 . List of su ga r r e fining com pa nie s in I ndone sia
Com pa n y
Loca t ion
Ye a r
e st a blish e d
Tot a l
ca pa cit y
( t ons)
PT Angels Product s
Serang, Bant en
1996
500,000
PT Jawam anis Rafinasi ( Wilm ar)
Cilegon, Bant en
2002
160,000
PT Sent ra Usahat am a Jaya
Cilegon, Bant en
2004
540,000
PT Perm at a Dunia Sukses Ut am a
Cigading, Bant en
2005
390,000
PT Dut a Sugar I nt ernat ional (Wilm ar)
Cilegon, Bant en
2005
800,000
PT Dharm apala Usaha Sukses
Cilacap, Cent ral Java
2007
250,000
PT Sugar Labint a
Sout h Lam pung
2007
540,000
PT Makassar Tene
Sout h Sulawesi
2009
200,000
TBLA
Lam pung
2014
212,000
Tot a l
Pr iva t e pla ye r s ca n
im por t
raw
su ga r
r e fine d suga r pr oduct s
only
a nd
W ilm a r gr oup dom ina t e d t he
suga r
r e fining
indust r y,
a ccou nt ing for 2 7 % of t ot a l
indust r y ca pa cit y
3 ,5 9 2 ,0 0 0
Source: Bahana
Ex hibit 2 2 . Tot a l inve st m e nt r e quir e d in 2 0 1 7 F, w or st , ba se a n d be st sce na r ios
D e t a ils
Sugar consum pt ion ( t ons)
Exist ing plant at ion area ( ha)
Exist ing plant at ions yield ( t ons/ ha)
Exist ing sugar ext ract ion rat e ( % )
Exist ing sugar product ion ( t ons)
Sugar deficit ( t ons)
New plant at ion yield ( t ons/ ha)
New extract ion rat e ( % )
Addit ion a l pla nt a t ion a r e a r e qu ir e d ( ha )
Addit ional sugar m ill plant needed ( unit s)
Avg. land cost ( I DRm n/ ha)
Avg. m aint enance cost (I DRm n/ ha)
Sugar m ill capacit y ( t ons)
Sugar m ill capex ( I DRbn)
Tot al land acquiring cost needed (I DRbn)
Tot al m aint enance cost needed (I DRbn)
Tot al sugar m ill capex needed ( I DRbn)
Tot a l cost ( I D Rbn )
W or st
6,976,326
464,981
80
7
2,629,932
4,346,394
Ba se
6,976,326
464,981
80
7
2,603,893
4,372,433
Be st
6,976,326
464,981
90
10
4,184,829
2,791,498
80
7
7 7 6 ,1 4 2
37
90
10
4 8 5 ,8 2 6
37
90
10
3 1 0 ,1 6 6
24
20
25
120,000
1,300
20
25
120,000
1,300
20
25
120,000
1,300
15,522.84
31,028.07
48,100
9 4 ,6 5 1
9,716.52
23,770.17
48,100
8 1 ,5 8 7
6,203.33
19,378.68
31,200
5 6 ,7 8 2
Source: Bahana est im at es
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
I D R8 2 t n
a nd
486k
r e quir e d
t o a ddr e ss
suga r de ficit in 2 0 1 7 F
ha
t he
7 Oct obe r 2 0 1 6
Ex hibit 2 3 . Ra w suga r pr ice a nd I ndone sia ’s suga r floor pr ice , Ja n 0 4 - Se p 1 6
( I DR/ k g)
10,000
Suga r
floor
pr ice
int r oduce d in 2 0 0 4 …
9, 000
fir st
8, 000
7, 000
6, 000
5, 000
4, 000
3, 000
2, 000
1, 000
Raw sugar pr ice
Sep- 16
Jan- 16
May- 16
Sep- 15
Jan- 15
May- 15
Sep- 14
Jan- 14
May- 14
Sep- 13
Jan- 13
May- 13
Sep- 12
Jan- 12
May- 12
Sep- 11
Jan- 11
May- 11
Sep- 10
Jan- 10
May- 10
Sep- 09
Jan- 09
May- 09
Sep- 08
Jan- 08
May- 08
Sep- 07
Jan- 07
May- 07
Sep- 06
Jan- 06
May- 06
Sep- 05
Jan- 05
May- 05
Sep- 04
Jan- 04
May- 04
-
Floor pr ice
Source: Bloom berg, Bahana
Apart from t he plan t o m at ch supply wit h t he dom est ic dem and for sugar in I ndonesia,
t he Governm ent int roduced a sugar floor price ( exhibit 23) t hrough t he issuance of
Minist erial Decree no.527/ 2004 for sugar im port s t o prot ect farm ers from low selling
prices and t o encourage local players in plant ing sugarcane. I ndonesia’s sugar floor
prices are aligned wit h farm ers’ cost of product ion est im at ed by t he Agricult ure Minist ry
( exhibit 24) . Declining yields and increases in land rent al cost s, which cont ribut ed
c.30% of t he t ot al product ion cost , were t he m ain drivers for farm ers’ increase in t he
cost of product ion. Moreover, t he sugar floor price also m oved in line wit h t he increase
in PTPN’s COGS. We believe TBLA, wit h a lower product ion cost com pared t o farm ers’
and PTPN’s product ion cost , is likely t o enj oy supernorm al profit s, w hile t he
inefficiencies in sugar indust ry are being addressed.
… t o pr ot e ct fa r m e r s fr om
low se lling pr ice
Ex hibit 2 4 . Su ga r floor pr ice a nd fa r m e r s’ pr oduct ion cost , 2 0 0 4 - 2 0 1 6
Floor pr ice a ligne d w it h
fa r m e r s’ pr oduct ion cost
( I DR/ k g)
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
2004
2005
2006
2007
2008
2009
Floor pr ice
2010
2011
2012
2013
Farm ers' product ion cost
Source: Bahana, Agricult ure Minist ry
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
2014
2015
2016
7 Oct obe r 2 0 1 6
Ex hibit 2 5 . PTPN ’s COGS a nd su ga r floor pr ice , 2 0 1 0 - 2 0 1 5
( I DR/ k g)
8,900
9, 000
8,500
8, 500
8,100
Suga r floor pr ice a lso m ove s
in line w it h PTPN ’s COGS
8,100
8, 000
7, 500
7,000
7, 000
6, 500
6,350
6,339
6,022
6, 000
5,714
5,628
5,361
5, 500
5, 000
4,475
4, 500
4, 000
2010
2011
2012
2013
PTPN's COGS
2014
2015
Floor pr ice
Source: Bahana, Com pany
Ex hibit 2 6 . Su ga r ca ne pr oduct ion cost , 2 0 1 4
Pr oduct ion cost
Seeds
Fert ilizers
Pest icides
Wages
Land processing
Plant ing shade crops
Plant ing est at e crops
Maint enance
Fert ilizing
Pest cont rolling
Harvest ing
Land rent cost
Equipm ent rent cost
Fuel
Agricult ural services
Ot hers
Pr oduct ion cost - t ot a l
Am ount ( I D Rm n/ ha )
3.1
2.9
0.1
La nd r e nt a l cost a ccoun t s for
3 2 % of t ot a l su ga r ca ne
pr oduct ion cost
0.9
0.0
0.8
2.0
0.7
0.1
1.8
7.8
0.3
0.1
1.2
2.4
2 4 .2
Source: I ndonesia St at ist ics Agency, Bahana
Ex hibit 2 7 . W or ld suga r ca ne pla nt e d a r e a , 2 0 0 0 - 2 0 1 5
( m n t ons)
12.0
( m n t ons)
2.0
1.8
11.0
1.6
10.0
1.4
9.0
1.2
8.0
1.0
7.0
0.8
6.0
0.6
5.0
0.4
4.0
0.2
3.0
2.0
0.0
2007
2008
Thailand
2009
2010
Philippine
2011
I ndonesia
2012
2013
Aust ralia
Source: I ndonesia St at ist ics Agency, FAO, Bahana
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
2014
2015
Br azil ( RHS)
Br a z il
ha d
t he
lar ge st
suga r ca ne pla nt e d a r e a a t
1 0 .9 m n ha in 2 0 1 5 …
7 Oct obe r 2 0 1 6
Ex hibit 2 8 . Top 5 su ga r - pr oducin g cou nt r ie s, 2 0 0 5 - 2 0 1 4
… a nd pr oduce d 7 3 m n t on s
or 4 2 % of globa l pr odu ct ion
( m n t ons)
80
70
60
50
40
30
20
10
2005
2006
2007
2008
Br azil
2009
I ndia
2010
China
2011
2012
Thailand
2013
2014
Pak ist an
Source: Bloom berg
Ex hibit 2 9 . W or ld pr odu ct ivit y yie ld, 2 0 1 5
( t ons/ ha)
Aust r a lia ha d m uch h ighe r
pr oduct ivit y yie ld com pa r e d
t o I ndone sia , give n sim ila r
pla nt a t ion a r e a a t c.4 0 0 k ha
30
25
20
15
10
5
0
2005
2006
2007
2008
Br azil
2009
2010
Thailand
2011
2012
I ndonesia
2013
2014
2015
Aust ralia
Source: USDA, Bloom berg, Bahana
Ex hibit 3 0 . La m pun g r a infa ll da t a , 2 0 0 6 - August 2 0 1 6
(mm)
500
Ra infa ll
is
a ppr oa chin g
a ve r a ge
in
Sum a t r a
450
400
350
300
250
200
150
100
50
0
Jan
Feb
Mar
Apr
May
Max
Jun
Min
Jul
Aug
Mean
Sep
2016
Source: Bahana
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
Oct
Nov
Dec
cur r e nt ly
1 0 - ye a r
La m pun g,
7 Oct obe r 2 0 1 6
Ex hibit 3 1 . Pr odu ct ion cost com pa r ison
( I D R/ k g)
TBLA's w hit e
suga r
TBLA's r e fine d
suga r
TBLA’s pr oduct ion cost for
w hit e suga r is 2 2 % che a pe r
t ha n it s r e fine d pr odu ct , or
2 7 % com pa r e d t o PTPN ’s
PTPN 's w h it e
suga r
Raw m at erial
cost
-
Maint enance
cost
2,402
Product ion cost
2,000
100
3,313
-
550
-
4 ,4 0 2
5 ,6 5 0
6 ,0 2 2
I m port dut y
COGS
5,000
-
2,709
Source: Com pany, Bahana
Ex hibit 3 2 . List of upcom ing su ga r m ill inve st m e nt s in I ndone sia
Com pa ny
Suga r m ill
ca pa cit y ( t ons)
Loca t ion
Sum ba, East Nusa Tenggara
150,000
Sout h Sum at era
150,000
Wilm ar group
Manggarai, East Nusa Tenggara
150,000
MEDC
Papua
Se ve r a l
I ndone sia n
conglom e r a t e s
are
r e por t e dly pla nning t o e nt e r
t he suga r bu sine ss
CPI N, Dj arum and
Wings group
n/ a
Source: Bahana, Bisnis.com
Ex hibit 3 3 . TBLA’s pa lm pla nt a t ion a r e a & a ve r a ge yie ld, 2 0 1 3 - 2 0 1 8 F
( ha)
( t ons/ ha)
17
57,000
56,474
16
56,000
15
55,000
14
54,158
53,758
53,751
54,000
13
53,258
12
52,895
53,000
11
52,000
10
51,000
9
2013
2014
2015
Palm plant ed area
2016F
2017F
Av erage y ield ( RHS)
Source: Com pany, Bahana
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
2018F
Yie ld e x pe ct e d t o incr e a se
post La N ina
7 Oct obe r 2 0 1 6
Ex hibit 3 4 . TBLA r e ve nu e cont r ibu t ion pe r se gm e nt , 2 0 1 4 - 2 0 1 8 F
( I DRbn)
10,000
Suga r busine ss t o cont r ibut e
3 7 % of t ot a l r e ve nue in
2017F
9, 000
-
8, 000
3,297
7, 000
2,996
277
42
884
6, 000
144
600
5, 000
2,200
4, 000
6,168
3, 000
5,412
5,185
4,587
2, 000
4,132
1, 000
2014
2015
2016F
Palm oil product s
Sugar product s
2017F
2018F
Ot hers
Source: Bahana, Com pany
Ex hibit 3 5 . Su ga r vs. CPO gr oss pr ofit pe r t on, 2 0 1 7 F
Suga r
( I D Rm n / ha )
W or st
Yield ( t ons/ ha)
Ba se
CPO
Be st
W or st
Ba se
Be st
8.5
8.5
8.5
4.5
4.5
4.5
Price (I DRk/ t on)
9,100
10,000
12,500
5,980
9,000
13,000
Price less 10% VAT ( I DRk/ t on)
8,190
9,000
11,250
Revenue
69.6
76.5
95.6
26.9
40.5
58.5
Plant ing & m aint enance cost
20.0
20.0
20.0
15.0
15.0
15.0
Processing cost
20.0
20.0
20.0
5.0
5.0
5.0
Gross profit
29.6
36.5
55.6
6.9
20.5
38.5
Unde r a ba se ca se sce na r io,
suga r pr ovide s 7 8 % highe r
gr oss
pr ofit
pe r
t on
com pa r e d t o CPO
Source: Bahana est im at es
Ex hibit 3 6 . TBLA’s suga r ca ne pla nt e d a r e a & a ve r a ge a ge , 2 0 1 2 - 2 0 1 8 F
( y ears)
( ha)
20,000
4.0
17,993
18,000
3.6
16,000
3.2
14,424
14,000
2.8
11,326
12,000
2.4
10,000
2.0
7,326
8, 000
1.6
6, 000
3,913
1.2
4, 000
2, 000
1,305
1,133
2012
2013
0.8
-
0.4
2014
2015
Tot al plant ed area
2016F
2017F
Av erage age ( RHS)
Source: Com pany, Bahana
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
2018F
TBLA’s
t ot a l
suga r ca ne
pla nt e d a r e a t o r e a ch 1 7 .9 k
ha by 2 0 1 8 F
7 Oct obe r 2 0 1 6
Ex hibit 3 7 . TBLA’s suga r ca ne pla nt a t ion in Te r ba nggi, La m pun g
Suga r ca ne
w as
be ing
ha r ve st e d, w hile w e visit e d
Source: Bahana
Ex hibit 3 8 . TBLA’s suga r ca ne pla nt a t ion, m ill & r e fine r y loca t ion
The 1 2 0 k - t on suga r m ill
pla nt is st r a t e gica lly loca t e d
w it hin
t he
com pa ny’s
suga r ca ne pla n t a t ion a r e a
Source: Com pany
Ex hibit 3 9 . TBLA’s se a por t a t W a y Lunik , La m pung
Pr iva t e
se a por t
w it h
6 0 0 t ons/ hou r
loa ding
ca pa cit y, e a sin g dist r ibut ion
bot t le ne ck t o la r ge m a r k e t in
Ja va a nd Sum a t e r a
Source: Com pany
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
7 Oct obe r 2 0 1 6
Ex hibit 4 0 . TBLA’s suga r m ill pla nt is ne a r com ple t ion
The su ga r m ill pla nt w ill
com m e nce it s ope r a t ion in
e a r ly 2 0 1 7 , …
Source: Bahana
Ex hibit 4 1 . I n side t he suga r m ill pla nt
… fe a t ur ing 5 - st a ge m illing
pr oce ss …
Source: Bahana
Ex hibit 4 2 . Va cuu m boile r s
… a nd va cuum boile r s t o
suppor t
high
suga r
e x t r a ct ion r a t e a t 1 0 % in
2017F
Source: Bahana
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
7 Oct obe r 2 0 1 6
Ex hibit 4 3 . TBLA’s suga r r e fine r y pla nt
Suga r
r e fine r y
w it h
pr oduct ion ca pa cit y of 2 1 6 k
t on s p.a .
Source: Bahana
Ex hibit 4 4 . TBLA’s im por t e d r a w suga r inve nt or y
2 0 k t on s of r a w
im por t e d fr om Br a z il
suga r
Source: Bahana
Ex hibit 4 5 . I m por t e d r a w suga r , be for e a n d a ft e r r e fining pr oce ss
Re fining pr oce ss r e sult s in
w hit e
color
a nd
h ighe r
sucr ose cont e nt of a bove
9 9 % for suga r
Source: Bahana
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
7 Oct obe r 2 0 1 6
Ex hibit 4 6 . Su m - of- t he - pa r t s va lua t ion
Se gm e nt s
N e t pr of it ( I D Rbn)
M e t hod
Va lu e
Palm oil business
409.9
2017F PE of 9.0x
3,689
Sugar m ill business
267.3
2017F PE of 13.5x
3,608
Sugar r efinery business
213.9
2017F PE of 2.5x
214
Tot al value ( I DRbn)
7,833
Shares out st anding ( m n)
5,342
Va lu e / Sha r e ( I D R)
1 ,4 7 0
Source: Bahana forecast s
Ex hibit 4 7 . Pe e r s com pa r ison, 2 0 1 6 F- 2 0 1 7 F
CPO b u sin e ss
ASTRA AGRO LESTARI TBK PT
SALI M I VOMAS PRATAMA TBK PT
SAMPOERNA AGRO TBK PT
TUNAS BARU LAMPUNG TBK PT
PP LONDON SUMATRA I NDONES PT
SI ME DARBY BERHAD
I OI CORP BHD
KUALA LUMPUR KEPONG BHD
GENTI NG PLANTATI ONS BHD
Su g a r m ill b u sin e ss
KHON KAEN SUGAR I NDUSTRY PCL
BURI RAM SUGAR PCL
NANNI NG SUGAR I NDUSTRY CO - A
ROGERS SUGAR I NC
Su g a r r e f in e r y b u sin e ss
DANGOTE SUGAR REFI NERY PLC
W e ig h t e d Av e r a g e
Source: Bloom berg, Bahana Not e:
Ma r k e t ca p
PER ( x )
( USDb )
2016F
2017F
3 1 .3
2 7 .1
2 2 .1
2.3
18.8
15.4
0.6
17.3
12.9
0.3
14.5
11.7
0.4
8.1
6.1
0.8
19.9
14.2
12.0
31.2
22.9
6.7
26.2
24.8
6.2
24.4
22.5
2.0
34.0
25.1
2 .3
9 3 .0
2 2 .9
0.5
20.6
16.5
0.2
22.2
18.2
1.1
175.8
30.3
0.5
14.8
15.1
0 .2
6 .0
5 .0
0.2
6.0
5.0
3 3 .8
1 2 6 .1
5 0 .0
Pricing as of 7 Oct ober 2016
PBV ( x )
2016F
2017F
2 .6
2 .3
1.8
1.7
0.5
0.5
1.1
1.0
1.3
1.4
1.4
1.3
1.6
1.5
5.3
4.1
2.5
2.4
1.9
1.8
2 .8
2 .5
1.3
1.2
3.6
3.4
4.6
4.0
na
na
1 .2
1 .1
1.2
1.1
6 .5
5 .8
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
EV/ EBI T DA ( x )
2016F
2017F
1 6 .0
1 4 .0
10.4
8.6
6.5
5.7
9.4
6.8
9.4
6.3
9.9
7.6
16.1
14.0
19.2
16.9
15.2
14.3
20.9
16.6
7 .2
6 .0
12.7
11.4
21.5
14.0
na
na
10.9
9.9
2 .3
2 .0
2.3
2.0
2 5 .5
2 1 .9
Div . y ie ld ( % )
2016F
2017F
2 .3
2 .7
1.8
2.5
2.1
2.5
1.2
1.8
3.7
7.0
2.0
2.2
2.6
3.1
2.2
2.4
2.4
2.5
0.7
0.9
2 .0
2 .3
3.2
4.4
2.1
1.7
na
na
5.5
5.5
9 .1
1 1 .2
9.1
11.2
1 3 .3
1 6 .2
ROE ( % )
2016F
2017F
9 .9
1 0 .5
10.5
11.6
2.9
3.8
7.6
9.3
16.4
25.6
6.7
9.0
5.3
6.7
18.9
16.7
11.2
11.9
5.3
7.0
5 .7
9 .6
5.5
7.9
16.4
17.8
5.9
12.7
na
na
1 9 .9
1 8 .3
19.9
18.3
3 5 .5
3 8 .4
7 Oct obe r 2 0 1 6
Tuna s Ba r u La m pun g
Ye a r t o 3 1 D e ce m be r
PROFI T & LOSS ( I D Rbn )
Sa le s
Gr oss pr ofit
EBI TDA
Depreciat ion
EBI T
Net int erest inc./ ( expense)
Forex gain/ ( losses)
Ot her incom e/ ( expense)
Pr e - t a x pr ofit
Taxes
Minorit y int erest
N e t profit
2014
2015
2016F
2017F
2018F
6 ,3 3 8
1 ,2 9 3
1 ,0 6 5
270
795
( 201)
( 105)
73
562
( 126)
( 3)
433
5 ,3 3 1
1 ,1 7 0
598
( 6)
604
( 219)
( 165)
43
263
( 62)
( 4)
197
6 ,6 0 9
1 ,4 5 2
999
217
782
( 236)
34
50
630
( 126)
( 4)
500
8 ,1 8 1
2 ,1 8 7
1 ,6 1 9
285
1 ,3 3 4
( 278)
62
1 ,1 1 9
( 224)
( 4)
891
9 ,4 6 5
2 ,5 5 5
1 ,9 8 8
337
1 ,6 5 1
( 308)
72
1 ,4 1 5
( 283)
( 4)
1 ,1 2 8
BALAN CE SH EET ( I D Rbn )
Cash and equivalent s
Trade receivables
I nvent ories
Fixed asset s
Ot her asset s
Tot a l a sse t s
I nt erest bearing liabilit ies
Trade payables
Ot her liabilit ies
Tot a l lia bilit ie s
Minorit y int erest
Sha r e h olde r s' e qu it y
520
711
956
2,843
2,288
7 ,3 2 8
3,194
292
1,388
4 ,8 7 5
18
2 ,4 3 6
296
797
1,146
4,442
2,601
9 ,2 9 3
4,690
330
1,386
6 ,4 0 6
21
2 ,8 6 6
799
575
937
5,337
2,551
1 0 ,2 0 8
4,887
297
1,778
6 ,9 6 2
26
3 ,2 1 9
662
858
1,264
6,144
3,074
1 2 ,0 1 2
5,687
371
2,186
8 ,2 4 4
33
3 ,7 3 6
650
981
1,389
6,765
3,637
1 3 ,4 3 3
6,287
406
2,506
9 ,1 9 9
38
4 ,1 9 6
CASH FLOW ( I D Rbn )
EBI T
Depreciat ion
Working capit al
Ot her operat ing it em s
Ope r a t in g ca sh flow
Net capit al expendit ure
Fr e e ca sh flow
Equit y raised/ ( bought )
Net borrowings
Ot her financing
N e t ca sh flow
Cash flow at beginning
Ca sh flow a t e n d
795
270
( 308)
( 214)
543
( 999)
( 455)
289
105
( 67)
( 128)
648
520
604
( 6)
( 0)
( 517)
80
( 713)
( 632)
( 5)
360
161
( 116)
520
296
782
217
629
166
1 ,7 9 4
( 1,345)
450
195
( 142)
503
296
799
1,334
285
( 619)
( 150)
850
( 1,420)
( 569)
801
( 369)
( 136)
799
662
1,651
337
( 299)
( 270)
1 ,4 1 9
( 1,368)
51
600
( 663)
(12)
662
650
20.5
6.4
20.4
16.0
12.5
6.8
70.3
1.1
2.6
109.8
43.6
32
17
63
7.4
2.4
22.0
15.4
11.3
3.7
28.3
1.1
3.8
153.3
50.5
58
27
94
16.4
5.1
22.0
15.1
11.8
7.6
75.0
0.7
2.7
127.0
47.9
32
21
66
25.6
8.0
26.7
20.2
16.3
10.9
75.0
0.8
3.2
134.5
47.3
38
23
77
28.5
8.9
27.0
21.5
17.4
11.9
75.0
0.8
4.7
134.3
46.8
38
21
73
719
( 3)
214
1
9,000
1,133
na
11,875
542
( 25)
296
38
7,500
3,913
na
13,393
462
( 15)
213
( 28)
8,000
7,326
11,000
13,400
527
14
261
22
8,923
11,326
10,000
13,000
577
9
299
14
9,538
14,424
10,000
13,000
RATI OS
ROAE ( % )
ROAA ( % )
Gross m argin ( % )
EBI TDA m argin ( % )
EBI T m argin ( % )
Net m argin ( % )
Payout rat io ( % )
Current rat io ( x)
I nt erest coverage ( x)
Net gearing ( % )
Debt s t o asset s ( % )
Debtor t urnover ( days)
Credit or t urnover ( days)
I nvent ory t urnover ( days)
M AJOR ASSUM PTI ON S
FFB product ion ( k tons)
Growt h ( % )
CPO product ion ( k t ons)
Growt h ( % )
ASP CPO ( I DR/ kg)
Sugar plant at ion ( ha)
ASP Sugar (I DR/ kg)
Avg. exchg. rat e (I DR/ USD)
Source: Com pany, Bahana est im at es
Gregorius Gary ( gregorius@bahana.co.id) + 6221 250 5081 ext . 3604
Ba ha na Se cu rit ies – Equ it y Re se a r ch – TBLA I J Cor por a t e Fla sh
2017F
r e ve nue
at
I D R8 ,1 8 1 bn, + 2 3 .8 % y - y on
a cce le r a t e d
cont r ibut ion
fr om su ga r busine ss
I ncr e a sin g de bt le ve ls …
… t o fina nce e x pa nsion of
it s pa lm
a nd suga r ca ne
pla nt a t ions
I m pr ove d m a r gin s in 2 0 1 7 F
a s a r e sult of r e cover y in
CPO pr ice s
FFB pr oduct ion t o r e cove r in
2 0 1 7 - 1 8 F post La N ina
Re se a r ch : + 6 2 2 1 2 5 0 5 0 8 1
H a r r y Su
harry.su@bahana.co.id
Senior Associat e Direct or
Head of St rat egy & Research
ext 3600
direct : + 62 21 250 5735
Sa n n i Sa t r io D w i Ut om o
sanni@bahana.co.id
Research Analyst
I ndust rial Est at es, Propert y
ext 3611
M u h a m m a d W a fi
wafi@bahana.co.id
Technical Analyst
ext 3609
Fik r i D zik r ia n Am r u lla h
fikri@bahana.co.id
Research Associat e
ext 3623
H a n di H u t a Ja ya
handi@bahana.co.id
St rat egist and Product Head
ext 3610
Re n a ldy Effe n dy
renaldy@bahana.co.id
Research Analyst
Consum er, Healt hcare
ext 3606
M a r dy Or a m a h i Alh u sn a h
m ardy@bahana.co.id
Research Analyst
Sm all Caps
ext 3621
Fa u za n Lu t h fi D j a m a l
fauzan@bahana.co.id
Research Associat e
ext 3613
Le on a r do H e n r y Ga va za , CFA
leonardo@bahana.co.id
Senior Research Manager
Aut o, Telco, I nfrast ruct ure
ext 3608
M ich a e l W Se t j oa di
m ichael@bahana.co.id
Research Analyst
Consum er, Poult ry
ext 3620
Gila n g Pu r n a m a
gilang.purnam a@bahana.co.id
Research Analyst
I ndust rials
ext 3601
M a de Ayu W ij a ya t i
m ade.ayu@bahana.co.id
Research Execut ive
ext 3607
Fa k h r u l Fu lvia n
fakhrul.fulvian@bahana.co.id
Econom ist
ext 3602
Gr e gor iu s Ga r y
gregorius@bahana.co.id
Research Analyst
Transport at ion, Plant at ions
ext 3604
Sa r a h Je ssica H u t a pe a
sarah.j essica@bahana.co.id
Macro & Fixed I ncom e Associat e
ext 3693
Ze fa n ya H a lim
zefanya@bahana.co.id
CA Manager
ext 3612
N ovia n t y Pe r m a t a Sa r i
noviant y@bahana.co.id
CA
ext 3618
D e a lin g Room : + 6 2 2 1 5 2 7 0 8 0 8
N a t a lia Su r j a dipu t r a
nat alia@bahana.co.id
Direct or of Sales &
Client Relat ionship Managem ent
ext 2500
Alvin Gu n a w a n
alvin.gunawan@bahana.co.id
I nst it ut ional Equit y Sales
ext 2591
N a a r a h Joe soe f
nara.j oesoef@bahana.co.id
I nst it ut ional Equit y Sales
ext 2592
H e ad Office
Graha Niaga, 19t h Floor
Jl. Jend. Sudirm an Kav. 58
Jakart a 12190
I ndonesia
Tel. 62 21 250 5081
Fax. 62 21 522 6049
+ 6 2 3 1 5 3 5 2 7 8 8 ( Su r a ba ya Br a n ch )
Ka r t ik a Su t a n di, CFA
kart ika.sut andi@bahana.co.id
Head of Equit y I nst it ut ional Sales
ext 2590
Ash ish Agr a w a l
ashish@bahana.co.id
Vice President
I nst it ut ional Equit y Sales
ext 2550 / 2553
Br a m Ta a r e a
bram @bahana.co.id
I nst it ut ional Equit y Sales
ext 2524
Su w a r di W idj a j a
Suwardi@bahana.co.id
I nst it ut ional Equit y Sales
ext 2548
H a n n a M a r ion da
hanna@bahana.co.id
Sales Trader
ext 2525
Adr ia n a Kosa sih
adri@bahana.co.id
Sales Execut ive
ext 2541
Yoh a n e s Adh i H a n dok o
yohanes@bahana.co.id
Manager, Surabaya Branch
ext 7250
Joh n M . D a sa a d
dasaad@bahana.co.id
I nst it ut ional Equit y Sales
ext 2549
Su r aba ya Bra n ch
Wism a BI I , Ground Floor
Jl. Pem uda 60- 70
Surabaya 60271
I ndonesia
Tel. 62 31 535 2788
Fax. 62 31 546 1157
I m por t a n t D isclosure s a nd D iscla im er
This publicat ion is prepared by PT.Bahana Securit ies and rev iewed by Daiwa Secur it ies Gr oup I nc. and/ or it s affiliat es, and dist r ibut ed out side I ndonesia by
Daiwa Secur it ies Gr oup I nc. and/ or it s affiliat es, ex cept t o t he ext ent expressly pr ov ided herein. Cert ain copies of t his publicat ion m ay be dist r ibut ed inside
and out side of I ndonesia by PT. Bahana Securit ies in accordance w it h relevant law s and regulat ions. This publicat ion and t he cont ent s hereof are int ended
for inform at ion purposes only, and m ay be subj ect t o change w it hout furt her not ice. Any use, disclosure, dist r ibut ion, dissem inat ion, copy ing, pr int ing or
reliance on t his publicat ion for any ot her purpose w it hout our pr ior consent or appr oval is st r ict ly prohibit ed. Any rev iew does not const it ut e a full ver ificat ion
of t he publicat ion and m erely pr ov ides a m inim um check. Neit her Daiwa Secur it ies Group I nc. nor any of it s respect ive parent , holding, subsidiar ies or
affiliat es, nor any of it s respect iv e direct ors, officers, servant s and em ployees, represent nor warrant t he accuracy or com plet eness of t he infor m at ion
cont ained herein or as t o t he ex ist ence of ot her fact s which m ight be significant , and w ill not accept any responsibilit y or liabilit y what soever for any use of or
reliance upon t his publicat ion or any of t he cont ent s hereof. Neit her t his publicat ion, nor any cont ent hereof, const it ut e, or are t o be const rued as, an offer or
solicit at ion of an offer t o buy or sell any of t he secur it ies or invest m ent s m ent ioned herein in any count ry or j urisdict ion nor, unless expressly prov ided, any
recom m endat ion or invest m ent opinion or adv ice. Any v iew , recom m endat ion, opinion or adv ice expressed in t his publicat ion const it ut es t he v iew s of t he
analyst ( s) nam ed herein and does not necessar ily reflect t hose of Daiwa Securit ies Gr oup I nc. and/ or it s affiliat es nor any of it s respect ive direct ors, officers,
servant s and em ployees except w here t he publicat ion st at es ot herw ise. This research report is not t o be relied upon by any person in m ak ing any invest m ent
decision or ot her w ise adv ising w it h respect t o, or dealing in, t he securit ies m ent ioned, as it does not t ake int o account t he specific inv est m ent obj ect ives,
financial sit uat ion and part icular needs of any person.
Neit her Daiwa Secur it ies Group I nc. nor any of it s affiliat es is licensed t o undert ake any business w it hin t he Republic of I ndonesia. Any display of any t rade
nam e or logo of t he Daiwa Securit ies Group I nc. on t his publicat ion shall not be deem ed t o be an undert ak ing of any business w it hin t he Republic of
I ndonesia.
Daiwa Securit ies Gr oup I nc., it s subsidiar ies or affiliat es, or it s or t heir respect ive direct ors, officers and em ployees from t im e t o t im e m ay have t rades as
principals, or have posit ions in, or have ot her int erest s in t he securit ies of t he com pany under research including m arket m ak ing act iv it ies, derivat ives in
respect of such secur it ies or m ay have also perform ed invest m ent bank ing and ot her serv ices for t he issuer of such secur it ies. The follow ing are addit ional
disclosures.
Ownership of Secur it ies
For “ Ownership of Secur it ies” infor m at ion, please v isit BlueMat r ix disclosure link at ht t ps: / / daiwa3. bluem at rix. com / sellside/ Disclosures.act ion.
I nvest m ent Bank ing Relat ionship
For “ I nvest m ent Bank ing Relat ionship” , please v isit BlueMat r ix disclosure link at ht t ps: / / daiwa3.bluem at rix.com / sellside/ Disclosures.act ion.
Ja pa n
Daiwa Secur it ies Co. Lt d. and Daiwa Secur it ies Group I nc.
Daiwa Secur it ies Co. Lt d. is a subsidiar y of Daiw a Secur it ies Group I nc.
I nvest m ent Bank ing Relat ionship
Wit hin t he preceding 12 m ont hs, The subsidiaries and/ or affiliat es of Daiwa Securit ies Group I nc. * has lead- m anaged public offerings and/ or secondary offerings
(excluding st raight bonds) of t he securit ies of t he following com panies: China Reinsurance Group Corporat ion (1508 HK).
* Subsidiar ies of Daiwa Secur it ies Group I nc. for t he purposes of t his sect ion shall m ean any one or m ore of:
• Daiwa Capit al Mar ket s Hong Kong Lim it ed ( 大和資本市場香港有限公司)
• Daiwa Capit al Mar ket s Singapore Lim it ed
• Daiwa Capit al Mar ket s Aust ralia Lim it ed
• Daiwa Capit al Mar ket s I ndia Pr ivat e Lim it ed
• Daiwa- Cat hay Capit al Market s Co. , Lt d.
• Daiwa Secur it ies Capit al Market s Korea Co., Lt d
Disclosure of I nt erest of Bahana Securit ies
I nvest m ent Bank ing Relat ionship
Wit hin t he preceding 12 m ont hs, Bahana Securit ies has lead- m anaged public offer ings and/ or secondary offer ings ( ex cluding st raight bonds) of t he secur it ies
of t he follow ing com panies: Aneka Tam bang Persero Tbk PT ( ANTM I J) ; PT Telekom unik asi I ndonesia ( Persero) Tbk ( TLKM I J) ; PT Wask it a Bet on Precast Tbk
( WSBP I J) .
H ong Kong
This research is dist r ibut ed in Hong Kong by Daiwa Capit al Market s Hong Kong Lim it ed ( 大和資本市場香港有限公司) ( “ DHK” ) which is r egulat ed by t he Hong
Kong Secur it ies and Fut ures Com m ission. Recipient s of t his research in Hong Kong m ay cont act DHK in respect of any m at t er ar ising from or in connect ion
w it h t his research.
Relevant Relat ionship ( DHK)
DHK m ay from t im e t o t im e have an indiv idual em ployed by or associat ed w it h it serves as an officer of any of t he com panies under it s research coverage.
Singa por e
This resear ch is dist r ibut ed in Singapore by Daiwa Capit al Mar ket s Singapore Lim it ed and it m ay only be dist r ibut ed in Singapore t o accredit ed invest ors,
expert invest ors and inst it ut ional invest ors as defined in t he Financial Adv isers Regulat ions and t he Securit ies and Fut ures Act ( Chapt er 289) , as am ended
from t im e t o t im e. By v irt ue of dist ribut ion t o t hese cat egory of inv est ors, Daiwa Capit al Market s Singapore Lim it ed and it s represent at ives are not required
t o com ply w it h Sect ion 36 of t he Financial Adv isers Act ( Chapt er 110) ( Sect ion 36 relat es t o disclosure of Daiwa Capit al Market s Singapore Lim it ed’s int erest
and/ or it s represent at ive’s int erest in secur it ies) . Recipient s of t his r esearch in Singapore m ay cont act Daiwa Capit al Mar ket s Singapore Lim it ed in respect of
any m at t er ar ising from or in connect ion w it h t he research.
Aust r a lia
This research is dist r ibut ed in Aust ralia by Daiwa Capit al Market s Aust ralia Lim it ed and it m ay only be dist r ibut ed in Aust ralia t o wholesale invest ors w it hin
t he m eaning of t he Corporat ions Act . Recipient s of t his research in Aust ralia m ay cont act Daiwa Capit al Market s St ock brok ing Lim it ed in respect of any
m at t er ar ising from or in connect ion w it h t he research.
I ndia
This research is dist r ibut ed in I ndia t o I nst it ut ional Client s only by Daiwa Capit al Mar ket s I ndia Pr ivat e Lim it ed ( Daiwa I ndia) which is an int erm ediar y
regist ered w it h Secur it ies & Exchange Board of I ndia as a St ock Broker, Merchant Bank and Research Analy st . Daiwa I ndia, it s Research Analyst and t heir
fam ily m em bers and it s associat es do not have any financial int erest save as disclosed or ot her undisclosed m at er ial conflict of int erest in t he secur it ies or
derivat ives of any com panies under coverage. Daiwa I ndia and it s associat es, m ay have received com pensat ion for any product s ot her t han I nvest m ent
Banking ( as disclosed) or br okerage serv ices fr om t he subj ect com pany in t his report or fr om any t hird part y during t he past 12 m ont hs. Daiwa I ndia and it s
associat es m ay have debt holdings in t he subj ect com pany. For inform at ion on ownership of equit y, please v isit BlueMat r ix disclosure Link at
htt ps: / / daiwa3.bluematrix.com / sellside/ Disclosures.action.
There is no m at er ial disciplinar y act ion against Daiwa I ndia by any regulat or y aut hor it y im pact ing equit y research analy sis act iv it ies as of t he dat e of t his
report .
Associat es of Daiwa I ndia, regist ered w it h I ndian regulat or s, include Daiwa Capit al Market s Singapor e Lim it ed and Daiwa Port folio Adv isory ( I ndia) Pr ivat e
Lim it ed.
Ta iw a n
This research is dist r ibut ed in Taiwan by Daiwa- Cat hay Capit al Mar ket s Co., Lt d and it m ay only be dist r ibut ed in Taiwan t o inst it ut ional invest ors or specific
invest ors who have signed recom m endat ion cont ract s w it h Daiwa- Cat hay Capit al Mar ket s Co., Lt d in accordance w it h t he Operat ional Regulat ions Governing
Securit ies Fir m s Recom m ending Trades in Securit ies t o Cust om ers. Recipient s of t his research in Taiw an m ay cont act Daiwa- Cat hay Capit al Mar ket s Co., Lt d
in respect of any m at t er ar ising fr om or in connect ion w it h t he research.
Philippine s
This research is dist r ibut ed in t he Philippines by DBP- Daiwa Capit al Market s Philippines, I nc. which is r egulat ed by t he Philippines Securit ies and Exchange
Com m ission and t he Philippines St ock Ex change, I nc. Recipient s of t his research in t he Philippines m ay cont act DBP- Daiw a Capit al Market s Philippines, I nc.
in respect of any m at t er ar ising fr om or in connect ion w it h t he research. DBP- Daiwa Capit al Market s Philippines, I nc. recom m ends t hat invest ors
independent ly assess, w it h a pr ofessional adv isor , t he specific financial risk s as well as t he legal, regulat ory, t ax, account ing, and ot her consequences of a
proposed t ransact ion. DBP- Daiw a Capit al Market s Philippines, I nc. m ay have posit ions or m ay be m at erially int erest ed in t he secur it ies in any of t he m arket s
m ent ioned in t he publicat ion or m ay have perform ed ot her serv ices for t he issuers of such secur it ies.
For relevant secur it ies and t rading rules please v isit SEC and PSE link at h t t p: / / w w w . sec. gov . ph / ir r / Am en dedI RRf in alv er sion . pdf an d
h t t p: / / w w w . pse. com . ph / respect ively.
Unit e d Kingdom
This research report is produced by Daiwa Secur it ies Co. Lt d. and/ or it s affiliat es and is dist r ibut ed in t he European Union, I celand, Liecht enst ein, Nor way
and Sw it zer land. Daiwa Capit al Market s Europe Lim it ed is aut hor ised and regulat ed by The Financial Conduct Aut hor it y ( “ FCA” ) and is a m em ber of t he
London St ock Ex change and Eurex. This publicat ion is int ended for invest ors who are not Ret ail Client s in t he Unit ed Kingdom w it hin t he m eaning of t he
Rules of t he FCA and should not t herefore be dist ribut ed t o such Ret ail Client s in t he Unit ed Kingdom . Should you ent er int o invest m ent business w it h Daiwa
Capit al Market s Europe’s affiliat