Small/Mid Cap Strategy and Stock Picks - the DBS Vickers ...
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Small/Mid Cap Strategy and Stock Picks - the DBS Vickers ...

Small/Mid Cap Strategy and Stock Picks - the DBS Vickers ... Small/Mid Cap Strategy and Stock Picks - the DBS Vickers ...

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Regional Small/Mid Strategy Q2 2008 Tunas Baru Lampung Bloomberg: TBLA IJ | Reuters: TBLA.JK BUY Rp445 JCI : 2,419.6 Price Target : 12-Month Rp780 Potential Catalyst: Higher than expected 2007 results, higher crude oil price and CPO price recovery. Analyst Herry Dion Mahargono +6221 3983 2668 herry.mahargono@id.dbsvickers.com Price Relative Rp 701.90 601.90 501.90 401.90 301.90 201.90 101.90 Relative Index 2004 2005 2006 2007 2008 Tunas Baru Lampung (LHS) Relative JCI INDEX (RHS) Forecasts and Valuation FY Dec (Rp bn) 2006A 2007F 2008F 2009F Turnover 1,194 1,566 2,249 2,207 EBITDA 224 304 419 499 Pre-tax Profit 79 125 217 255 Net Profit 53 87 152 179 Net Pft (Pre Ex.) 53 87 152 179 EPS (Rp) 12.8 21.2 36.8 43.3 EPS Pre Ex. (Rp) 12.8 21.2 36.8 43.3 EPS Gth Pre Ex (%) 749 65 74 18 Diluted EPS (Rp) 11.6 19.2 33.4 39.3 Net DPS (Rp) 3.8 6.3 11.0 13.0 BV Per Share (Rp) 209.6 224.4 250.1 280.5 PE (X) 35.5 21.5 12.4 10.5 PE Pre Ex. (X) 35.5 21.5 12.4 10.5 P/Cash Flow (X) 16.5 10.5 6.9 5.7 EV/EBITDA (X) 9.3 7.7 5.8 5.2 Net Div Yield (%) 0.8 1.4 2.4 2.9 P/Book Value (X) 2.2 2.0 1.8 1.6 Net Debt/Equity (X) 0.3 0.5 0.6 0.6 ROAE (%) 7.7 9.7 15.5 16.3 Consensus EPS (Rp): Sector : Consumer Goods Principal Business: Planatation 219 199 179 159 139 119 99 79 59 39 24 31 42 The laggard Story: Tunas Baru Lampung (TBLA) guided that FY07 net profit could reach Rp.100bn (+88% y-o-y), or 15% higher than our forecast. This would be led by strong commodity prices, mainly CPO, as CPO production fell c.12% y-o-y due to adverse weather. Recently, the company acquired 45,000ha land in West Kalimantan. We view this positively because it allows the company to grow amid intensifying competition for plantation land. Point: We remain optimistic of CPO prices, backed by a foreseeable critically low supply of oilseeds worldwide in 2008/09 and persistently high crude oil price. As such, we expect the company to book a robust performance again this year on the back of stronger CPO price coupled with solid volume growth due to normalized weather and young tree profile. TBLA expects FFB production to nearly double in 2009 due to its young trees. And as a fully integrated company, TBLA is in a better position to cushion against lower CPO price compared to pure upstream players. Relevance: TBLA is currently trading at 13.3x and 11.3x 2008-09 (FD) PER compared to the broader market’s 14.5x and 11.9x, respectively. Our target price of Rp780 is derived based on DCF valuation with WACC of 12.5% and 6% terminal growth rate. Our target price implies EV/ha (nucleus only) of US$10,400. At A Glance Issued Capital (m shrs) 4,167 Mkt. Cap (Rpbn/US$m) 1,854 / 202 Major Shareholders Sungai Budi (%) 19.6 Sungai Budi Perkasa (%) 14.6 Budi Sulfat Jaya(%) (%) 15.0 Free Float (%) 50.8 Avg. Daily Vol.(‘000) 25,497 Page 60 www.dbsvickers.com Refer to important disclosures at the end of this report

Regional Small/Mid Strategy Q2 2008 Tunas Baru Lampung Income Statement (Rp bn) Balance Sheet (Rp bn) FY Dec 2006A 2007F 2008F 2009F FY Dec 2006A 2007F 2008F 2009F Turnover 1,194 1,566 2,249 2,207 Net Fixed Assets 762 724 746 748 Cost of Goods Sold (932) (1,210) (1,772) (1,676) Invts in Associates & JVs 0 0 0 0 Gross Profit 262 357 477 531 Other LT Assets 624 750 889 1,028 Other Opng (Exp)/Inc (128) (144) (175) (179) Cash & ST Invts 263 9 4 21 Operating Profit 135 213 302 352 Other Current Assets 400 456 633 617 Other Non Opg (Exp)/Inc 28 0 (4) (2) Total Assets 2,049 1,939 2,273 2,414 Associates & JV Inc 0 0 0 0 Net Interest (Exp)/Inc (84) (88) (82) (95) ST Debt 110 0 200 350 Exceptional Gain/(Loss) 0 0 0 0 Other Current Liab 338 269 345 235 Pre-tax Profit 79 125 217 255 LT Debt 370 473 377 377 Tax (26) (37) (65) (77) Other LT Liabilities 366 270 318 294 Minority Interest 0 0 0 0 Shareholder’s Equity 864 926 1,032 1,157 Preference Dividend 0 0 0 0 Minority Interests 1 1 1 1 Net Profit 53 87 152 179 Total Cap. & Liab. 2,049 1,939 2,273 2,414 Net Profit before Except. 53 87 152 179 EBITDA 224 304 419 499 Non-Cash Wkg. Capital 62 187 288 382 Net Cash/(Debt) (217) (464) (573) (706) Sales Gth (%) (2.2) 31.2 43.6 (1.9) EBITDA Gth (%) 38.8 35.5 37.9 19.2 Opg Profit Gth (%) 12.8 57.8 42.2 16.4 Net Profit Gth (%) 749.4 65.0 73.8 17.8 Effective Tax Rate (%) 33.1 30.0 30.0 30.0 Cash Flow Statement (Rp bn) Rates & Ratio FY Dec 2006A 2007F 2008F 2009F FY Dec 2006A 2007F 2008F 2009F Pre-Tax Profit 79 125 217 255 Gross Margins (%) 22.0 22.8 21.2 24.1 Dep. & Amort. 78 55 61 91 Opg Profit Margin (%) 11.3 13.6 13.5 16.0 Tax Paid 0 0 0 0 Net Profit Margin (%) 4.4 5.6 6.7 8.1 Assoc. & JV Inc/(loss) 0 0 0 0 ROAE (%) 7.7 9.7 15.5 16.3 Chg in Wkg.Cap. (102) 26 (136) 5 ROA (%) 3.0 4.4 7.2 7.6 Other Operating CF 308 (132) (18) (100) ROCE (%) 8.5 12.0 14.1 14.2 Net Operating CF 364 73 123 251 Div Payout Ratio (%) 30.0 30.0 30.0 30.0 Capital Exp.(net) (436) (143) (222) (232) Net Interest Cover (x) 1.6 2.4 3.7 3.7 Other Invts.(net) 0 0 0 0 Asset Turnover (x) 0.7 0.8 1.1 0.9 Invts in Assoc. & JV 0 0 0 0 Debtors Turn (avg days) 37.6 32.9 27.8 32.7 Div from Assoc & JV 0 0 0 0 Creditors Turn (avg days) 15.3 14.4 13.9 17.2 Other Investing CF 0 0 0 0 Inventory Turn (avg days) 54.3 45.5 43.2 52.9 Net Investing CF (436) (143) (222) (232) Current Ratio (x) 1.5 1.7 1.2 1.1 Div Paid (3) (26) (45) (54) Quick Ratio (x) 1.2 1.1 0.7 0.7 Chg in Gross Debt (96) (47) 139 52 Net Debt/Equity (X) 0.3 0.5 0.6 0.6 Capital Issues 305 0 0 0 Capex to Debt (%) 90.9 30.2 38.4 31.9 Other Financing CF 0 0 0 0 N. Cash/(Debt)PS (Rp) (52.6) (112.6) (139.0) (171.2) Net Financing CF 206 (73) 93 (2) Opg CFPS (Rp) 112.9 11.4 62.9 59.7 Net Cashflow 134 (143) (5) 17 Free CFPS (Rp) (17.5) (16.9) (23.9) 4.6 Quarterly / Interim Income Statement (Rpbn) 2007 Revenue Breakdown FY Dec 4Q2006 1Q2007 2Q2007 3Q2007 Turnover 1,194 346 827 1,314 Cost of Goods Sold (932) (291) (676) (1,051) Gross Profit 262 55 151 263 Other Oper. (Exp)/Inc (128) (29) (76) (121) Operating Profit 135 26 75 143 Other Non Opg (Exp)/Inc 28 (7) (2) (15) Associates & JV Inc 0 0 0 0 Net Interest (Exp)/Inc (84) (13) (37) (46) Exceptional Gain/(Loss) 0 0 0 0 Pre-tax Profit 79 6 36 82 Tax (26) (4) (10) (29) Minority Interest 0 0 0 0 Net Profit 53 2 26 52 Net profit bef Except. 53 2 26 52 EBITDA 163 19 73 128 Laundry Soap 3% PKO 16% PFAD 1% CNO 2% Cream Soap 1% Sales Gth (%) 39.8 (71.0) 139.2 58.8 EBITDA Gth (%) 33.4 (88.4) 282.1 75.9 Opg Profit Gth (%) 34.2 (80.5) 183.6 91.1 Net Profit Gth (%) 42.4 (96.0) 1,128.6 103.0 Gross Margins (%) 22.0 15.9 18.2 20.0 Opg Profit Margins (%) 11.3 7.6 9.0 10.9 Net Profit Margins (%) 4.4 0.6 3.1 4.0 Source: Company, DBS Vickers Olein 25% CPO 38% Page 61

Regional <strong>Small</strong>/<strong>Mid</strong> <strong>Strategy</strong> Q2 2008<br />

Tunas Baru Lampung<br />

Income Statement (Rp bn)<br />

Balance Sheet (Rp bn)<br />

FY Dec 2006A 2007F 2008F 2009F FY Dec 2006A 2007F 2008F 2009F<br />

Turnover 1,194 1,566 2,249 2,207 Net Fixed Assets 762 724 746 748<br />

Cost of Goods Sold (932) (1,210) (1,772) (1,676) Invts in Associates & JVs 0 0 0 0<br />

Gross Profit 262 357 477 531 O<strong>the</strong>r LT Assets 624 750 889 1,028<br />

O<strong>the</strong>r Opng (Exp)/Inc (128) (144) (175) (179) Cash & ST Invts 263 9 4 21<br />

Operating Profit 135 213 302 352 O<strong>the</strong>r Current Assets 400 456 633 617<br />

O<strong>the</strong>r Non Opg (Exp)/Inc 28 0 (4) (2) Total Assets 2,049 1,939 2,273 2,414<br />

Associates & JV Inc 0 0 0 0<br />

Net Interest (Exp)/Inc (84) (88) (82) (95) ST Debt 110 0 200 350<br />

Exceptional Gain/(Loss) 0 0 0 0 O<strong>the</strong>r Current Liab 338 269 345 235<br />

Pre-tax Profit 79 125 217 255 LT Debt 370 473 377 377<br />

Tax (26) (37) (65) (77) O<strong>the</strong>r LT Liabilities 366 270 318 294<br />

Minority Interest 0 0 0 0 Shareholder’s Equity 864 926 1,032 1,157<br />

Preference Dividend 0 0 0 0 Minority Interests 1 1 1 1<br />

Net Profit 53 87 152 179 Total <strong>Cap</strong>. & Liab. 2,049 1,939 2,273 2,414<br />

Net Profit before Except. 53 87 152 179<br />

EBITDA 224 304 419 499 Non-Cash Wkg. <strong>Cap</strong>ital 62 187 288 382<br />

Net Cash/(Debt) (217) (464) (573) (706)<br />

Sales Gth (%) (2.2) 31.2 43.6 (1.9)<br />

EBITDA Gth (%) 38.8 35.5 37.9 19.2<br />

Opg Profit Gth (%) 12.8 57.8 42.2 16.4<br />

Net Profit Gth (%) 749.4 65.0 73.8 17.8<br />

Effective Tax Rate (%) 33.1 30.0 30.0 30.0<br />

Cash Flow Statement (Rp bn)<br />

Rates & Ratio<br />

FY Dec 2006A 2007F 2008F 2009F FY Dec 2006A 2007F 2008F 2009F<br />

Pre-Tax Profit 79 125 217 255 Gross Margins (%) 22.0 22.8 21.2 24.1<br />

Dep. & Amort. 78 55 61 91 Opg Profit Margin (%) 11.3 13.6 13.5 16.0<br />

Tax Paid 0 0 0 0 Net Profit Margin (%) 4.4 5.6 6.7 8.1<br />

Assoc. & JV Inc/(loss) 0 0 0 0 ROAE (%) 7.7 9.7 15.5 16.3<br />

Chg in Wkg.<strong>Cap</strong>. (102) 26 (136) 5 ROA (%) 3.0 4.4 7.2 7.6<br />

O<strong>the</strong>r Operating CF 308 (132) (18) (100) ROCE (%) 8.5 12.0 14.1 14.2<br />

Net Operating CF 364 73 123 251 Div Payout Ratio (%) 30.0 30.0 30.0 30.0<br />

<strong>Cap</strong>ital Exp.(net) (436) (143) (222) (232) Net Interest Cover (x) 1.6 2.4 3.7 3.7<br />

O<strong>the</strong>r Invts.(net) 0 0 0 0 Asset Turnover (x) 0.7 0.8 1.1 0.9<br />

Invts in Assoc. & JV 0 0 0 0 Debtors Turn (avg days) 37.6 32.9 27.8 32.7<br />

Div from Assoc & JV 0 0 0 0 Creditors Turn (avg days) 15.3 14.4 13.9 17.2<br />

O<strong>the</strong>r Investing CF 0 0 0 0 Inventory Turn (avg days) 54.3 45.5 43.2 52.9<br />

Net Investing CF (436) (143) (222) (232) Current Ratio (x) 1.5 1.7 1.2 1.1<br />

Div Paid (3) (26) (45) (54) Quick Ratio (x) 1.2 1.1 0.7 0.7<br />

Chg in Gross Debt (96) (47) 139 52 Net Debt/Equity (X) 0.3 0.5 0.6 0.6<br />

<strong>Cap</strong>ital Issues 305 0 0 0 <strong>Cap</strong>ex to Debt (%) 90.9 30.2 38.4 31.9<br />

O<strong>the</strong>r Financing CF 0 0 0 0 N. Cash/(Debt)PS (Rp) (52.6) (112.6) (139.0) (171.2)<br />

Net Financing CF 206 (73) 93 (2) Opg CFPS (Rp) 112.9 11.4 62.9 59.7<br />

Net Cashflow 134 (143) (5) 17 Free CFPS (Rp) (17.5) (16.9) (23.9) 4.6<br />

Quarterly / Interim Income Statement (Rpbn)<br />

2007 Revenue Breakdown<br />

FY Dec 4Q2006 1Q2007 2Q2007 3Q2007<br />

Turnover 1,194 346 827 1,314<br />

Cost of Goods Sold (932) (291) (676) (1,051)<br />

Gross Profit 262 55 151 263<br />

O<strong>the</strong>r Oper. (Exp)/Inc (128) (29) (76) (121)<br />

Operating Profit 135 26 75 143<br />

O<strong>the</strong>r Non Opg (Exp)/Inc 28 (7) (2) (15)<br />

Associates & JV Inc 0 0 0 0<br />

Net Interest (Exp)/Inc (84) (13) (37) (46)<br />

Exceptional Gain/(Loss) 0 0 0 0<br />

Pre-tax Profit 79 6 36 82<br />

Tax (26) (4) (10) (29)<br />

Minority Interest 0 0 0 0<br />

Net Profit 53 2 26 52<br />

Net profit bef Except. 53 2 26 52<br />

EBITDA 163 19 73 128<br />

Laundry<br />

Soap 3%<br />

PKO 16%<br />

PFAD 1%<br />

CNO 2%<br />

Cream Soap<br />

1%<br />

Sales Gth (%) 39.8 (71.0) 139.2 58.8<br />

EBITDA Gth (%) 33.4 (88.4) 282.1 75.9<br />

Opg Profit Gth (%) 34.2 (80.5) 183.6 91.1<br />

Net Profit Gth (%) 42.4 (96.0) 1,128.6 103.0<br />

Gross Margins (%) 22.0 15.9 18.2 20.0<br />

Opg Profit Margins (%) 11.3 7.6 9.0 10.9<br />

Net Profit Margins (%) 4.4 0.6 3.1 4.0<br />

Source: Company, <strong>DBS</strong> <strong>Vickers</strong><br />

Olein 25%<br />

CPO 38%<br />

Page 61

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