EQUITY RESEARCH

KINO – Company Visit - 12 December 2019

CIPTADANA SEKURITAS ASIA

Not Rated Kino Indonesia

TP: N/A Key takeaways from meeting

Sector Consumer Overview of company products

Kino Indonesia (KINO) is one of Indonesia's leading FMCG Company where the business
Bloomberg Ticker KINO IJ includes: (1) personal care, (2) beverages, (3) food and (4) pharmaceuticals. The group
currently has 33 brands and 7 of it are the clear market leader within its category. To
Share Price Performance achieve high growth the firm needs to rely on new brands as the existing brand growth
Last price (Rp) 3,280 will be capped due to high market share position in specific niche category. Its new halal
tooth paste called Sasha could has more room to grow further as this brand still at the
Avg. daily T/O (Rpbn/USDmn) 3.7/0.3
introduction stage and about to enter growth stage as company will invest on the branding
3m 6m 12m to increase brand awareness and penetration. Lola Remedios is the high growth brands
within company portfolios under Pharmacy segment. Lola Remedios has shown high
Absolute (%) -2.1 19.7 12.7
acceptance rate in Philippines’ and promising growth as indicated from company export.
Relative to JCI (%) 0.3 20.8 11.2
52w High/Low price (Rp) 4,370/2,250 Overview of 9M19 performance
Company revenue grew by 34.1% YoY to 3.4bn in 9M19, driven by pharmacy segment
which grew 19-fold this year (Lola remedies as growth driver). Personal Care and
4,500 70% Beverages grew by 29%/19% on the back of recent product launches and improving
4,000 60% distribution network from previous distribution optimization initiatives which result in
3,500 50% leaner distribution channel (previous distributors 150 now only 120). KINO delivers 317.2%
3,000 40% earnings YoY growth to Rp 447.1bn which came on the back of 1). One off revaluation gain
2,500 30% Rp 264bn, 2). 1.2% Operating margin expansion to 8.1% in 9M19 (Vs. 6.6% in 9M18), and 3).
2,000 20% 85% lower net loss from subsidiary to Rp 1.6bn in 9M19 (vs. Rp 11.1bn in 9M18). If we
1,500 10% taken out the one off gain the firm still delivers 81% net profit growth.
1,000 0%
500 -10% Export the next growth driver
0 -20% Company export sales contribution has increased from 5% in 2018 to 11% in 9M19 which
mostly came from 3 brands namely: Elips, Sasha, and Lola Remedios. The biggest export
Dec-18

Oct-19
Nov-19
Dec-19
Jan-19

Jun-19
May-19

Jul-19
Feb-19
Mar-19
Apr-19

Aug-19
Sep-19

destination is the Philippines with 6% of sales contribution and the export value to the
Philippines was Rp209 bn, or equivalent to 55% of company export value (Rp 383bn total
KINO 1yr Rel. to JCI (RHS) as of 9M19). Whereas the other countries export contribution still small and the firm
Outstanding shrs (mn) 1,429
planned to deepen its existing export market by pushing the distributors target if possible.
Another strategy to grow export is entering China market mainly Xinjian (population total
Mkt. Cap (Rpbn/USDmn) 4,686/334 around 23.5 mn, 45% of it Muslim) by promoting Sasha brand which use Siwak as an
Estimated free float (%) 19.5 ingredients. With 15%-20% export contribution target and 20% blended revenue target for
2020 the export value growth for 2020 will be around 64%-118%, and contribution to
Major shareholders blended revenue growth would be around 10%-24%.
PT Kino Investindo 69.5%
Management guidance
Nusantara FMCG Ltd 10.7%  The management guides for 20% revenue growth for 2020, which will be mainly
Harry Sanusi 10.0% driven volume rather than ASP (typically around 3-5% p.a.)
 No product launch on the pipeline yet
EPS Consensus  A&P is expected to be around 19%-20%
 Export contribution seen increase to 15%-20%
Ciptadana Cons. % Diff  Capex 350bn for machinery purchase as some production facilities utilization
2019F n/a n/a n/a already above 70%
2020F n/a n/a n/a Valuation
2021F n/a n/a n/a KINO is currently trading at PER of 14.5x using annualized 9M19 core EPS of Rp
231.8/share. We prefer to use core EPS as the firm has recorded Rp264.2 revaluation gain
from bargain purchase of its subsidiary and Rp1.3 bn unrealized gain on short term
investment. If we use the total EPS, the company traded at PER of 7.8x.

Year to 30 Sep 2015A 2016A 2017A 2018A 9M19

Revenue (Rpbn) 3,603.8 3,493.0 3,160.6 3,611.7 3,483.8
Operating profit (Rpbn) 433.8 239.1 186.8 236.0 280.6
Muhammad Fariz Net profit (Rpbn) 263.0 180.6 110.4 150.1 447.1
+62 21 2557 4800 ext. 740 EPS (Rp) 184.1 126.4 77.3 105.1 313.0
farizmuhammad@ciptadana.com EPS growth (%) (31.3) (38.9) 36.0 197.8
Net-DER (X) 0.1 0.2 0.1 0.2 0.3
http://www.ciptadana.com So urce : KINO, Ciptadana Estimates

This document is being provided for the exclusive use of BUDHY SIALLAGAN at PT MIRAE ASSET
Please see analyst certification and other important disclosures at the back of this report 2
SEKURITAS INDONESIA
 EQUITY RESEARCH
KINO – Company Visit - 12 December 2019
CIPTADANA SEKURITAS ASIA

EQUITY RESEARCH

HEAD OF RESEARCH ANALYST ANALYST

Arief Budiman
Strategy, Automotive, Heavy Equipment,
Construction, Oil & Gas and Shipping
T +62 21 2557 4800 ext 819
E budimanarief@ciptadana.com
Erni Marsella Siahaan, CFA Yasmin Soulisa
Banking Property, Plantations
T +62 21 2557 4800 ext 919 T +62 21 2557 4800 ext 799
E siahaanerni@ciptadana.com E soulisayasmin@ciptadana.com

ECONOMIST ANALYST ANALYST

Nicko Yosafat Fahressi Fahalmesta Robert Sebastian
T +62 21 2557 4800 ext 820 Cement, Toll Road, Poultry Retail, Healthcare
E yosafatnicko@ciptadana.com T +62 21 2557 4800 ext 735 T +62 21 2557 4800 ext 760
E fahalmestafahressi@ciptadana.com E sebastianrobert@ciptadana.com

ANALYST ANALYST ANALYST

Gani Thomas Radityo Muhammad Fariz
Telco, Tower, Media Coal, Metal Mining Consumer, Cigarette
T +62 21 2557 4800 ext 734 T +62 21 2557 4800 ext 795 T +62 21 2557 4800 ext 740
E gani@ciptadana.com E radityothomas@ciptadana.com E farizmuhammad@ciptadana.com

TECHNICAL ANALYST RESEARCH ASSISTANT

Trevor Gasman Sumarni
T +62 21 2557 4800 ext 934 T +62 21 2557 4800 ext 920
E gasmantrevor@ciptadana.com E sumarni@ciptadana.com

EQUITY SALES

DIRECTOR OF INSTITUTIONAL EQUITY SALES

Dadang Mulyana
Plaza ASIA Office Park unit 2
Jl. Jend. Sudirman Kav. 59
Jakarta - 12190
T +62 21 2557 4800 ext 838
F +62 21 2557 4900
E mulyanadadang@ciptadana.com

BRANCH OFFICES

JAKARTA - MANGGA DUA JAKARTA - PURI KENCANA SURABAYA

Komplek Harco Mangga Dua Perkantoran Puri Niaga III Intiland Tower Surabaya
Rukan Blok C No.10 Jl. Puri Kencana Blok M8 No.2E Ground Floor Suite 5 & 6
Jl. Mangga Dua Raya Kembangan Jl. Panglima Sudirman 101-103
Jakarta - 10730 Jakarta - 11610 Surabaya - 60271
T +62 21 600 2850 T +62 21 5830 3450 T +62 31 534 3938
F +62 21 612 1049 F +62 21 5830 3449 F +62 31 534 3886

This document is being provided for the exclusive use of BUDHY SIALLAGAN at PT MIRAE ASSET
SEKURITAS INDONESIA Please see analyst certification and other important disclosures at the back of this report 3
 EQUITY RESEARCH
KINO – Company Visit - 12 December 2019
CIPTADANA SEKURITAS ASIA

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This document is being provided for the exclusive use of BUDHY SIALLAGAN at PT MIRAE ASSET
Please see analyst certification and other important disclosures at the back of this report 4
SEKURITAS INDONESIA