Confidential Customized for Lorem Ipsum LLC Version 1.

Business Analysis &

Valuation
PT Hanjaya Mandala Sampoerna Tbk (HMSP)
 AVB - C

Elvia Rosantina Ph.D.

Team Members Dr. Darminto S.E., M.B.A.

JOSHUA TIMOTHY | 1606911433

ANGGA FAHMI DIRGA | 1606891406

EVIE AMANDHA | 1606887144

Joshua Timothy Evie Amandha Angga Fahmi Dirga

2
Strategy Analysis
Week 2

3
Industry Overview | 2018
● In 2018 volume sales of cigarettes decline slightly and current value sales rise by 10% to stand at
307.1 billion sticks worth Rp352.3 trillion
● Increased excise taxes and tax structure changes bring mixed results, but higher prices are slowing
volume growth
● HM Sampoerna maintains its leading volume share on the strength of its Dji Sam Soe brand in
2018
● Over the forecast period volume sales of cigarettes are expected to post a Compound Annual
Growth Rate (CAGR) of -1% due to effect of excise tax increase on prices
Euromonitor, July 2019

4
Company Profile
PT Hanjaya Mandala Sampoerna Tbk (HMSP)

PT Gudang Garam Tbk (GGRM)

5
PT Hanjaya Mandala
Sampoerna Tbk.
HMSP
PT Hanjaya Mandala Sampoerna Tbk (Sampoerna) is an
Indonesia-based company primarily engaged in the
manufacture and trading of clove cigarettes, which are
locally known as kretek. The company produces both
hand-rolled kretek and machine-rolled kretek, utilizing its
manufacturing facilities located in Pasuruan, Karawang,
Surabaya, Malang, and Probolinggo.

Products:
Sampoerna A, Dji Sam Soe, Sampoerna U, Sampoerna Kretek,
Marlboro
6
2018
Performance
Based on PT Hanjaya Mandala Sampoerna Tbk’s Annual Report

33,0% 101,4 13,5

Market Share Volume Net Profit
In billion units in IDR trillion

7
2018
Performance
Based on Euromonitor

28,3% 87.047 1
Market Share of Tobacco Million Sticks - Retail Company Rank in
2018 Volume in Tobacco 2018 Tobacco in Indonesia

8
PT Gudang Garam Tbk.
GGRM
PT Gudang Garam Tbk is an Indonesia-based company
primarily engaged in manufacturing clove cigarettes, which
are locally known as kretek. Its business is classified into three
operating segments: cigarettes, paperboards, and others. The
company produces a range of kretek, including traditional
hand-rolled kretek, machine-made kretek and low-tar,
low-nicotine variants its manufacturing facilities are located
in several areas in Indonesia, namely Kediri, Gempol,
Karanganyar and Sumenep.

Products:
Klobot, Sriwedari, Djaja, Merah Series
Gudang Garam Series, Surya Series, GG Move
Gudang Garam Signature Mild, Surya Pro Mild, GG Mild 9
2018
Performance
Based on PT Gudang Garam Tbk’s Annual Report

23,1% 85,2 23,1

Market Share Volume Net Profit
In billion units in IDR trillion

10
2018
Performance
Based on Euromonitor

25,2% 77.456 2
Market Share of Tobacco 2018 Million Sticks - Retail Volume Company Rank in Tobacco in
in Tobacco 2018 Indonesia

11
Rivalry Among
Existing Firms
These are the top 5 companies in Cigarettes

Based on Euromonitor

01 | PT HM Sampoerna Tbk
02 | PT Gudang Garam Tbk
03 | PT Djarum
04 | PT Bentoel Internasional Investama Tbk
05 | PT Philip Morris Indonesia

12
Rivalry Among
Existing Firms
These are the brand shares of Cigarettes

Based on Euromonitor

13
Porter’s 5 Forces
Cigarettes Industry

14
 Threats of
Substitution

HIGH

Buyer Power Competitive Rivalry Supplier Power

LOW LOW HIGH

Threats of New
Entrants

LOW
15
Competitive Advantage
PT Hanjaya Mandala Sampoerna Tbk (HMSP)

PT Gudang Garam Tbk (GGRM)

16
 ● Offering unique and excellent
quality products.
Sampoerna A-Mild for instance is
known for its good quality in machine
PT Hanjaya Mandala made cigarettes or Dji Sam Soe
provides excellent quality for clove
Sampoerna Tbk. cigarettes.

HMSP ● Investment in R&D

In addition, Sampoerna also

DIFFERENTIATION admitted that it was conducting a

domestic market test for aerosol and
iQost cigarette products. This iQost
product was released in March.
(idnfinancials.com - May 2019)

17
 ● Diversified Products
As of May 2019, there are four new
brands introduce by HMSP this
year. Philip Morris Bold 12s (SKM
HT), Dji Sam Soe Magnum Mild 50s
and 20s (SKM LT), Dji Sam Soe

PT Hanjaya Mandala Super Premium 12s (SKT) and A

Mild Splash 16s (SKM LT).
Sampoerna Tbk. (indopremier - May 2019)

HMSP ● Export
The company will also increase
sales in terms of exports. HMSP
DIFFERENTIATION President Director is optimistic that
exports will increase because
starting last year HSMP operates a
new factory in Karawang. HMSP
also began exporting to Japan, as
the 40th export destination country.
(kontan - May 2019)
18
 ● Maintaining affordable prices
According to RHB Sekuritas' Head of
Research, Hendry Wibowo, there is a
different strategy between GGRM and

PT Gudang Garam
HMSP where GGRM did not increase
prices and focus on increasing market

Tbk. share while HMSP continued to raise

prices to increase margins, so the
GGRM results were different. (cnbc
indonesia - August 2019)
Results: #1 Sales in Q2 2019

COST LEADERSHIP Based on the company's financial statements, until

the end of June 2019 GGRM posted an increase in
revenue of 16.42% (yoy) to Rp 52.74 trillion, while
HMSP recorded a total revenue of Rp 50.72 trillion.

DATAGRAPHICS: Brand shares of cigarettes

19
Porter’s Four
Corner’s
PT Gudang Garam Tbk (GGRM)

20
 Drivers Current Strategy

● Kretek producer leader ● Business expansion

● Employee welfare ● Embed the Catur

PT Gudang Dharma

Garam Tbk.
GGRM
Cigarette product innovations that can reduce health risk

Management Capabilities
Assumptions
● The increased in ● Export
excise tax will ● Increased in profit
increase the price of
GGRM products
21
PESTLE Analysis
Cigarettes Industry

22
 Politic Economy Social

Framework Convention Economic growth Empowerment

on Tobacco Control
Customs Culture
Depends on customs
Unemployment
UU 36/2009 art. 113(2) is
gone, UU 39/2007 art. Export
5(4) - industry and
company’s condition

Interdependent

23
Technology Legal Environment

Advancement Increase tax (around Pollution

10%, effective Jan
2018) 3R concept

PP 109/2012 - legal Carbon footprint

age
Environmental
PMK 146/2017 - friendly production
customs system

24
Conclusions
Politic
There is interdependent relationship between cigarettes companies and government, because the
cigarettes companies need the government to make a profitable regulation and government needs
the cigarettes companies to support Indonesia’s economic growth from cigarettes customs.

Economy
Indonesia’s government is focusing in economic growth, one of the contributor to Indonesia’s
income is cigarettes companies (from customs and exports).
Due to nature of cigarettes companies that needs a lot of labor, it can help to provide workfield, as
we know our unemployment rate is ±5%.

25
Conclusions
Social
Indonesia’s tobacco and cloves farmer usually do not have enough skills and knowledge, so
cigarettes companies can help to empower them through collaboration or their CSR programme.
Indonesian people have the culture that passed through generation, that is smoking, therefore this
condition can help cigarettes companies to be sustain, but the health conscious culture that in
trends nowadays can impact (decrease) the selling of cigarettes.

Technology
Nowadays there is technological advancement that enable cigarettes companies to improve their
production system, reduce their production cost, and innovate more (e.g. flavoured cigarettes).

26
Conclusions
Legal
Indonesia is the country of law, everything that lives and operate in Indonesia should follow the law
including cigarettes companies.

Environment
Due to the highly polluted world, cigarettes companies are forced to comply to environmental
regulation (e.g. AMDAL, CSR), be responsible for their waste through 3R concept (reduce, reuse,
recycle), and use environmental friendly production system.

27
Corporate Strategies
PT Hanjaya Mandala Sampoerna Tbk (HMSP)

28
 ● Well-positioned product
portfolio
PT Hanjaya Mandala ● Product Innovation
Sampoerna Tbk. ● Attract, develop and retain the
HMSP best talent
● Enhance the “go-to-market”
Corporate Strategies business model
● Effective resource management

29
Week 2 Conclusions
In 2018, PT Hanjaya Mandala Sampoerna Tbk has been successful in
implementing their corporate strategies proven by their rank in cigarettes
industry.

However, in Q1 2019, their sales is lower than PT Gudang Garam Tbk

caused by Sampoerna’s decision to raise prices in order to increase margins.

30
Sources

EUROMONITOR
Annual Report PT Gudang Garam Tbk
Annual Report PT HM Sampoerna Tbk
https://geotimes.co.id/kolom/ekonomi-politik-bisnis-rokok/
https://finance.detik.com/industri/d-2947821/begini-pentingnya-industri-rokok-bagi-ekonomi-ri
https://www.idnfinancials.com/news/25390/sampoerna-strategies-declining-sales-volume
https://www.cnbcindonesia.com/market/20190802110106-19-89326/terapkan-strategi-berbeda-laba-ggrm-salip-hmsp
https://insight.kontan.co.id/news/simak-strategi-hm-sampoerna-hmsp-tingkatkan-penjualan-rokok-tahun-ini

31
Accounting Analysis
Week 3

32
Overview
PT Hanjaya Mandala Sampoerna Tbk (HMSP)

PT Gudang Garam Tbk (GGRM)

33
 No administrative sanctions
PT Gudang Garam were imposed on the Company,
Tbk. the Board of Commissioners and
GGRM the Board of Directors by the
capital market regulators and
Legal Liability other authorities.

34
 Neither Sampoerna, nor any
PT Hanjaya Mandala member of its Board of
Sampoerna Tbk. Commissioners and Board of
Directors were subject to
HMSP
material administrative
sanctions by OJK or any other
Legal Liability
authorities.

35
PT Gudang Garam
Tbk. Siddharta Widjaja & Rekan
Registered Public Accountant
GGRM 33rd floor Wisma GKBI
28, Jl. Jend. Sudirman
Jakarta 10210
External Auditor Indonesia
2018

36
PT Hanjaya Mandala
Sampoerna Tbk. Kantor Akuntan Publik Tanudiredja,
Wibisana, Rintis & Rekan
HMSP Registered Public Accountant
WTC 3
Jl. Jend. Sudirman Kav. 29-31
External Auditor Jakarta 12920
2017-2018 Indonesia

37
Steps in Accounting
Analysis
PT Hanjaya Mandala Sampoerna Tbk (HMSP)

PT Gudang Garam Tbk (GGRM)

38
 Manufacturer
Cigarettes
Identify Principal ● Inventory
Accounting Policies ● Fixed asset
● Post employment benefit
HMSP - GGRM ● Related parties transactions

Step 1

39
Inventory (LCNRV)
Inventories are required to be stated at the lower of cost and net realisable value (PSAK 14 par 5)

HMSP 2018 & 2017: Appropriate

Finished goods, raw materials and supplies, work in progress, merchandise inventory, land and buildings
held for sale are stated at the lower of cost or net realisable value.

GGRM 2018: Appropriate

Inventories are valued at the lower of cost or net realizable value.

40
Inventory (Weighted Average/FIFO)
For inventory items that are not interchangeable, specific costs are attributed to the specific individual
items of inventory. For items that are interchangeable, PSAK allows the FIFO or weighted average cost
formulas. (PSAK 14 par 18 & 20)

HMSP 2018 & 2017: Appropriate

Cost is determined by the weighted-average method, except for the excise tax inventory, for which cost is
determined by the specific identification method.

41
Inventory (Weighted Average/FIFO)-Cont.
GGRM 2018: Appropriate
Cost of cigarette finished goods is computed based on average actual production cost, plus cost of
packaging and excise duty ribbons (including VAT and cigarette tax) for cigarettes already packed and
provided with excise duty ribbons. Cost of paperboard finished goods is computed based on average
actual production cost, plus cost of packaging. Cost of merchandise is computed using the FIFO method.
Cost of goods in process is computed based on average actual production cost proportional to their stage
of completion. Cost of raw/supplementary materials, spare parts and factory supplies is computed using
the average method. Cost of excise duty ribbons (including VAT and cigarette tax) is assigned by using
specific identification of their actual purchase price.

42
Inventory (Provision)
HMSP 2018 & 2017:
A provision for obsolete and slow moving inventory is determined based on a review of the future usage
or sale of the individual inventory items. Provisions are written-off as such inventories are sold or
physically disposed of.

GGRM 2018:
Not stated

43
Fixed Asset (Initial Recognition)
Fixed Asset are required to be stated at historical cost less accumulated depreciation and accumulated
impairment losses (PSAK 16 par 30)

HMSP 2018 & 2017: Appropriate

Fixed assets are stated at historical cost, less accumulated depreciation.

GGRM 2018: Appropriate

Fixed assets other than land are measured using the cost model, i.e., initially measured at cost and
subsequently net of accumulated depreciation and impairment losses.

44
Fixed Asset (Depreciation Method)
Depreciation method -> straight line method, diminishing balance method, sum of the unit method.
(PSAK 16 par 63)

HMSP 2018 & 2017: Appropriate

Depreciation is computed using straight line method.

GGRM 2018: Appropriate

Depreciation of the fixed assets other than lans is applied using straight line method.

45
Post Employment Benefit (Steps)

Steps for accounting by an entity for defined benefit plans (PSAK 24 par 53)

HMSP 2018 & 2017: Appropriate

As stated in their Notes to Financial Statements no 2.p. (post-employment benefits)

GGRM 2018: Appropriate

As stated in their Notes to Financial Statements no 16.a. (post-employment benefits)

46
Post Employment Benefit (Discount Rate)
The rate used to discount post-employment benefit obligations shall be determined by reference to
market yields at the end of the reporting period on high quality corporate bonds. In countries where
there is no deep market in such bonds, the market yields on government bonds shall be used, (PSAK 24
par 83)

HMSP 2018 & 2017: Appropriate

The present value of the defined benefit obligation is determined by discounting the estimated future
cash outflows using interest rates of Government Bonds (considering currently there is no deep market
for high- quality corporate bonds) on the reporting date that are denominated in the currency in which
the benefits will be paid, and that have terms to maturity approximating the terms of the related pension
liability.
47
Post Employment Benefit (Discount Rate)-Cont.
GGRM 2018: Appropriate
The discount rate is used in determining the present value of the benefits obligation at valuation date. In
general, the discount rate is usually determined in line with the availability of government bond in the
active capital market at the reporting date.

48
Related Parties Transaction
HMSP 2018 & 2017: Appropriate

The Group has transactions with related parties, which have related party relationships as defined in
accordance with the SFAS 7. All significant transactions with related parties are disclosed in the notes to
the consolidated financial statements.

GGRM 2018: Appropriate

Related party terms used are in accordance with Statement of Financial Accounting Standard (“PSAK”)
No. 7, “Related Party Disclosures”. All significant transactions and balances with related parties are
disclosed in the notes to the consolidated financial statements.

49
 Common Flexibility
Assess Accounting ●
●
Depreciation policy
Inventory accounting policy
Flexibility ● Estimation of pension & other
post-employment benefits
HMSP-GGRM
Little Flexibility
Step 2 ● Related parties transaction

50
 ● How do the firm’s accounting
policies compare to the norms in the
industry?
● Do managers face strong incentives
Evaluate Accounting to use accounting discretion to
manage earnings?
Strategy ● Has the firm changed any of its

HMSP-GGRM policies or estimates? What is the

justification?
● Have the company’s policies and
Step 3 ●
estimates been realistic in the past?
Does the firm structure any
significant business transactions so
that it can achieve certain
accounting objectives?

51
STEP 3 (HMSP - 2017&2018; GGRM - 2018)
● How do the firm’s accounting policies compare to the norms in the industry?
○ Comply to PSAK
● Do managers face strong incentives to use accounting discretion to manage earnings?
○ Cannot be interpreted
● Has the firm changed any of its policies or estimates? What is the justification?
○ Yes, because there is changed in PSAK
● Have the company’s policies and estimates been realistic in the past?
○ Yes
● Does the firm structure any significant business transactions so that it can achieve certain
accounting objectives?
○ No

52
 ● The Company’s
Strategies
● Accounting Policy
Evaluate the Quality ● Financial & Non-financial
of Disclosure Performance Discussion
HMSP-GGRM ● Operating Segments
● Bad News
Step 4 ● Relationship with
Investor

53
STEP 4 (The Company’s Strategies)
HMSP
HMSP has elaborated their strategies in their
Annual Report. Their Strategies are included in
five strategic pillars: (1) well-positioned product
portfolio, (2) product innovation, (3) attract,
develop and retain the best talent, (4) enhance
the ‘go-to- market’ business model and (5)
effective resource management.
GGRM
GGRM in their annual report or their financial
statement did not elaborate their strategies.
However, GGRM gave their optimistic view to
stay competitive in a dynamic market of
cigarettes.
54
STEP 4 (Accounting Policy)

HMSP
HMSP’s Consolidated Financial Statements
were prepared in accordance with the
Indonesian Financial Accounting Standards and
the Financial Services Authority/OJK
regulations (previously known as Capital Market
and Financial Institutions Supervisory Agency
(BAPEPAM-LK)’s regulations).
GGRM
GGRM’s consolidated financial statements
have been prepared in conformity with
Indonesian Financial Accounting Standards
(“SAK”).

55
STEP 4 (Financial & Non-financial Discussion)

HMSP GGRM
HMSP in their annual report describes the In the company's annual report, the directors
company's performance which includes changes discuss about GGRM’s financial performance
in sales, sales expenses, current year profits, which includes any changes from the previous
other comprehensive income, assets, liabilities, year and the reasons for those changes.
and equity owned by the company and changes
in profits obtained.
Management’s Discussion of Financial
Management Discussion & Analysis
Condition & Results of Operations
56
STEP 4 (Operating Segments)
HMSP
The chief operating decision-maker is of the
view that the Group operates in one operating
segment, i.e. manufacturing and trading of
cigarettes.
GGRM
GGRM’s operating segment reporting of the
Company and subsidiaries is based on business
segments that consist of cigarettes, paperboards
and others.
57
STEP 4 (Bad News)
HMSP
Neither Sampoerna, nor any member of its
Board of Commissioners and Board of Directors
were subject to material administrative
sanctions by OJK or any other authorities.
GGRM
No administrative sanctions were imposed on
the Company, the Board of Commissioners and
the Board of Directors by the capital market
regulators and other authorities.
58
STEP 4 (Relationship with Investors)
HMSP
HMSP has disclosed all of the information
regarding their Group in form of an Annual
Report that can be accessed by all of their
stakeholders.
GGRM
GGRM has disclosed their information regarding
their Group in form of an Annual Report that
can be accessed by all of their stakeholders.
59
 ● Unexplained changes in accounting, especially
when performance is poor
● Unexplained transactions that boost profits
● Unusual increases in accounts receivable in
relation to sales increases
● Unusual increases in inventories in relation to sales

Identify Potential Red ●

increases
An increasing gap between a firm’s reported
income and its cash flow from operating activities
Flags ● An increasing gap between a firm’s reported
income and its tax income

HMSP-GGRM ● A tendency to use financing mechanisms such as

research and development partnerships,
special-purpose entities, and the sale of
receivables with recourse

Step 5 ●
●
Unexpected large asset write-offs
Large fourth-quarter adjustments
● Qualified audit opinions or changes in independent
auditors that are not well justified
● Unexplained increases in contingencies and
off-balance sheet transactions

60
 INDICATOR
Unexplained changes in accounting,
especially when performance is poor
Unexplained transactions that boost profits
HMSP
No indications
All of HMSP income are detailed
in their notes of financial
statement. HMSP also stated
that there were no
sales/operating revenues from
customers that exceeded 10% of
total sales/operating revenues.
GGRM
No Indications
All of GGRM income are
detailed in their notes of
financial statement. GGRM
also stated that there were no
sales/operating revenues from
customers that exceeded 10%
of total sales/operating
revenues.
61
 INDICATOR HMSP GGRM

Unusual increases in accounts receivable in

relation to sales increases No Indications No Indications

On 2018 there was no increased,

Unusual increases in inventories in relation to
sales increases
On 2018 there was an
instead it was a decreased in
increased in amount of 1.65%,
amount of, but this was not a red
but this was not a red flag
flag

62
 INDICATOR HMSP GGRM

Comprehensive profit in 2018

An increasing gap between a firm’s reported amounted to Rp7,968,008 million,
Comprehensive profit in 2018
income and its cash flow from operating activities while cash flows from operating
amounted to Rp13,629,251 million,
activities amounted to
while cash flows from operating
Rp11,224,700 million. That is, the
activities amounted to
difference between the two is
Rp20,193,483 million. That is, the
Rp3,256,692 million. Meanwhile,
difference between the two is
in 2017, the comprehensive profit
Rp.6,564,232 million. Meanwhile, in
was Rp7,703,622 million and cash
2017, the comprehensive profit was
flow from operating activities was
Rp12,483,134 million and the cash
Rp8,204,579 million. That is, the
flow from operating activities was
difference between the two is
Rp15,376,315 million. That is, the
Rp500,957 million. There was a
difference between the two is
significant increase in difference
Rp2,893,181 million. There is a
(550%), even more than the
significant increase in difference
increase in HMSP. This happens
(127%), which may be a red flag. This
because of an increase in sales and
can be an indication of changes in the
can be an indication of changes in
company's accrual estimate.
the company's accrual estimate.
Therefore it is very possible that
there will be a red flag
63
 INDICATOR
An increasing gap between a firm’s reported
income and its tax income
HMSP GGRM
Profit before income tax in
Profit before income tax in 2018
2018 was IDR10,555,589
amounted to Rp17,229,447
million, while profit according
million, while profit based on tax
to tax was IDR10,503,744
was Rp17,133,357 million. That
million. That is, the difference
is, the difference between the
between the two is Rp. 51,845
two is Rp96,090 million.
million. Meanwhile, in 2017,
Meanwhile, in 2017, the profit
profit before tax amounted to
before tax amounted to
Rp10,490,815 million and
Rp16,013,317 million and profit
profit according to tax
according to tax amounted to
amounted to Rp10,265,004
Rp15,830,731 million. That is,
million. That is, the difference
the difference between the two
between the two is Rp.225,811
is Rp182,586 million. There is no
million. There is no increase in
increase in difference, but a
difference, but a decrease, so it
decrease, so it is not a red flag.
is not a red flag.
64
 INDICATOR HMSP GGRM

A tendency to use financing

mechanisms such as research and
development partnerships, No Indications No Indications
special-purpose entities, and the
sale of receivables with recourse

Unexpected large asset write-offs No indications No indications

Large fourth-quarter adjustments No indications No indications

65
 INDICATOR
Qualified audit opinions or changes
in independent auditors that are
not well justified
Related-party transactions or
transactions between related
entities
Unexplained increases in
contingencies and off-balance sheet
transactions
HMSP
HMSP got unqualified audit opinions
No indications
Have large amount of related-parties
transactions, but HMSP has
disclosed all of it in Notes to
Financial Statements
GGRM
GGRM got unqualified audit
opinions
No indications
Have related-party transactions,
though it’s not as large as HMSP , but
GGRM has disclosed all of it in Notes
to Financial Statements
66
Beneish M Score
Supporting evidence regarding red-flags
PT Hanjaya Mandala Sampoerna Tbk (HMSP)

PT Gudang Garam Tbk (GGRM)

67
HMSP - 2017
Conclusion
PT. Hanjaya Mandala Sampoerna Tbk is not
likely to have manipulated their earnings

Parameter:
<-2,22 not likely
>-2,22 likely

68
HMSP - 2018
Conclusion
PT. Hanjaya Mandala Sampoerna Tbk is not
likely to have manipulated their earnings

Parameter:
<-2,22 not likely
>-2,22 likely

69
GGRM - 2018
Conclusion
PT. Gudang Garam Tbk is not likely to have
manipulated their earnings

Parameter:
<-2,22 not likely
>-2,22 likely

70
Undo Accounting Both HMSP & GGRM
Distortions do not need to recast
HMSP-GGRM their financial
Step 6
statements

71
Financial Statement

PT Hanjaya Mandala Sampoerna Tbk (HMSP)

PT Gudang Garam Tbk (GGRM)

72
HMSP - 2017

73
Balance Sheet
HMSP - 2017

74
Balance Sheet
HMSP - 2017

Cont.

75
Profit/Loss
HMSP - 2017

76
Profit/Loss
HMSP - 2017

Cont.

77
Changes in Equity
HMSP - 2017

78
 Cash Flow
HMSP - 2017

79
 Cash Flow
HMSP - 2017

Cont.

80
HMSP - 2018

81
Balance Sheet
HMSP - 2018

82
Balance Sheet
HMSP - 2018

Cont.

83
Profit/Loss
HMSP - 2018

84
Profit/Loss
HMSP - 2018

Cont.

85
Changes in Equity
HMSP - 2018

86
 Cash Flow
HMSP - 2018

87
 Cash Flow
HMSP - 2018

Cont.

88
GGRM - 2018

89
Balance Sheet
GGRM - 2018

90
Balance Sheet
GGRM - 2018

Cont.

91
Profit/Loss
GGRM - 2018

92
Changes in Equity
GGRM - 2018

93
 Cash Flow
GGRM - 2018

94
Overstated/Understated
Assets & Liabilities Possibilities
PT Hanjaya Mandala Sampoerna Tbk (HMSP)

PT Gudang Garam Tbk (GGRM)

95
 Assets
HMSP - 2018 Possibility:
Understated
● Higher depreciation expense
Fixed Assets ● Higher accumulated depreciation
● Understatement of assets

96
Related Parties
Transactions Possibility:
Overstated
HMSP - 2018 ● High amount transaction in crucial
accounts, such as account receivables,
sales, etc.

97
 Liabilities
HMSP - 2018 Possibility:
Overstated
● There is actuarial loss
Post-Employment
Benefits

98
 Assets
HMSP - 2018 Possibility:
Understated
● Higher depreciation expense
Fixed Assets ● Higher accumulated depreciation
● Understatement of assets

99
 Assets
Possibility:
GGRM - 2018
Understated
● Higher depreciation expense
Fixed Assets ● Higher accumulated depreciation
● Understatement of assets

100
Week 3 Conclusions
Based on our data, we can conclude that either HMSP or GGRM already
present their information fairly (they have got unqualified opinion from
their independent external auditor).

HMSP and GGRM is not likely to manipulate their Financial Report based
on Beneish M Calculator.

HMSP and GGRM still have some possibility to overstate or understate

their assets/liabilities/equity.

101
Sources - Week 3

ANNUAL REPORT:
Annual Report 2018 PT Gudang Garam Tbk
Annual Report 2018 PT HM Sampoerna Tbk
Annual Report 2017 PT HM Sampoerna Tbk

FINANCIAL REPORT:
Financial Report 2018 PT Gudang Garam Tbk
Financial Report 2018 PT HM Sampoerna Tbk
Financial Report 2017 PT HM Sampoerna Tbk

102
Financial Analysis
Week 4

103
Financial Statement

PT Hanjaya Mandala Sampoerna Tbk (HMSP)

PT Gudang Garam Tbk (GGRM)

104
HMSP - 2017

105
Balance Sheet
HMSP - 2017

106
Balance Sheet
HMSP - 2017

Cont.

107
Profit/Loss
HMSP - 2017

108
Profit/Loss
HMSP - 2017

Cont.

109
Changes in Equity
HMSP - 2017

110
 Cash Flow
HMSP - 2017

111
 Cash Flow
HMSP - 2017

Cont.

112
HMSP - 2018

113
Balance Sheet
HMSP - 2018

114
Balance Sheet
HMSP - 2018

Cont.

115
Profit/Loss
HMSP - 2018

116
Profit/Loss
HMSP - 2018

Cont.

117
Changes in Equity
HMSP - 2018

118
 Cash Flow
HMSP - 2018

119
 Cash Flow
HMSP - 2018

Cont.

120
GGRM - 2018

121
Balance Sheet
GGRM - 2018

122
Balance Sheet
GGRM - 2018

Cont.

123
Profit/Loss
GGRM - 2018

124
Changes in Equity
GGRM - 2018

125
 Cash Flow
GGRM - 2018

126
Standardized Financial
Statement
PT Hanjaya Mandala Sampoerna Tbk (HMSP)

PT Gudang Garam Tbk (GGRM)

127
Balance Sheet

128
Balance Sheet (Cont.)

129
Income Statement - by function

130
Income Statement - by nature

131
Standardized SCF - Direct

132
Standardized SCF - Direct (Cont.)

133
Ratio Analysis
PT Hanjaya Mandala Sampoerna Tbk (HMSP)

PT Gudang Garam Tbk (GGRM)

134
 HMSP GGRM

2017 2017

2018
2018

In million rupiah 135

Ratio Analysis

136
Ratio Analysis (Cont.)

137
Ratio Analysis (Cont.)

138
Ratio Analysis (Cont.)

139
Ratio Analysis (Cont.)

140
Cash Flow Analysis
PT Hanjaya Mandala Sampoerna Tbk (HMSP)

PT Gudang Garam Tbk (GGRM)

141
Cash Flow Analysis

142
Week 4 Conclusions
In 2018, operating cash flow for HMSP is positive and tends to increase
compared to 2017. Operating cash flow for GGRM is also positive but it
tends to decrease compared to 2017.

Total current liability for HMSP is Rp8.793.999.000.000 and its operating

cash flow is Rp20.193.483.000.000.

Total current liability for GGRM is Rp22.003.567.000.000 and its operating

cash flow is Rp11.224.700.000.000.

143
Week 4 Conclusions
In 2018, operating cash flow for HMSP is positive and tends to increase
compared to 2017. Operating cash flow for GGRM is also positive but it
tends to decrease compared to 2017.

Total current liability for HMSP is Rp8.793.999.000.000 and its operating

cash flow is Rp20.193.483.000.000.

Total current liability for GGRM is Rp22.003.567.000.000 and its operating

cash flow is Rp11.224.700.000.000.

144
Prospective Analysis: Forecasting
Week 5

145
Assumptions
PT Hanjaya Mandala Sampoerna Tbk (HMSP)

146
Macroeconomic Assumption
● Economic growth
In 2018 economic growth was 5.17%, higher than 2017 of 5.07%. 2019 target of 5.3% (2019
APBN)
● Inflation
Inflation in 2018 is 3.13%. 2019 target 3.1%
● Exchange rate
The exchange rate of the rupiah against the dollar in 2018 at 13,882. The 2019 target is 14,400

147
Industry
● Excise Tax
Excise tax will increase 23% in 2020
● Consumer Preferences
Middle and upper consumer preferences tend to shift to healthier cigarettes
● Anti Tobacco Campaign
The cigarette industry is often hit by overly publicized propaganda
● Framework Convention on Tobacco Control (FCTC)
The FCTC is accused of aiming to kill IHT, because in FCTC, there are 38 articles that explicitly
regulate the prohibition of the distribution of tobacco products
148
Company Assumption
● Distribution Channel
The company sells and distributes cigarettes through 106 sales offices and distribution centers of
the Company and 33 exclusive zonified distributors (EZD) throughout Indonesia, with 7 (seven)
zone representative offices
● Affiliation with Foreign Company
The company has a main parent entity related to financing, namely Phillip Morris International Inc.
● More secure financing
The company has a low ratio of total liabilities to total assets and debt to equity reflecting the
capacity of the Company who are strong in financing their growth using their own sources of funds
and own equity
149
Sales Growth
In 2016, HMSP experienced a significant sales increase of 7.18%.

For 2017 and 2018, HMSP sales always increase. But, the increase in 2017
(+ 3.80%) is relatively below compared with 2016 sales.

Even though in 2018 it increased again (+ 7.72%).

150
Margin NOPAT

In 2017, HMSP Net Operating Profit After Tax (NOPAT) was decreased by 0.60%, while in 2018 it
was actually increased by 5.15%.

These are some factors that affect NOPAT:

● Increase in Excise Tax

● SG & A Cost Stickiness

151
Working Capital to Sales
HMSP's working capital consists of (1) operating cash, (2) trade receivables, (3) inventories, (4) trade
payables, and (5) other current assets and liabilities. In 2018, days’ receivables was 13 days which is a
constant from previous years, and days’ payables was 12 days which decreased by 1 day from previous
years. Because the changes are not significant, it is assumed that this ratio remains for the next 3 years.

Meanwhile, days’ inventory in 2018 decreased from 88 days to 68 days (-22.36%). This indicates that
trade bar sales are more effective, but can also be influenced by the amount of inventory that has
decreased due to a decrease in the amount of production (due to falling demand). In the future, it is
predicted that the days ’inventory will decrease but there will be a slight increase in 2019 due to SPM
excise taxation.

Lastly, because there is no further information, the average operating cash and current assets / other
short-term debt are assumed to be constant.
152
Non Current Asset to Sales
Non-current non-operational assets of HMSP decreased during 2017 (- 3%), but
increased in 2018 (6,48%).

Because this factor has no clear expectations, it is assumed that non-current

operating assets will be constant during 2019-2021 with an average increase of
1,67% per year.

153
Non Operating Investment
In 2017 & 2018 there was a decrease in non-operational investment due to a decline
in the value of investment properties. It is assumed that going forward, the value of
investment in associates is constant while the value of investment property
decreases (due to depreciation), so that overall investment assets will decline by an
average of 2% per year.

154
Capital Structure
From 2016-2018, the debt to equity ratio is HMSP 0. This is because since
2015, the company no longer uses loans as a form of financing. This
full-equity financing policy is assumed to be constant for the next three
years.

155
Forecasting
PT Hanjaya Mandala Sampoerna Tbk (HMSP)

156
Forecast Assumptions

157
Condensed Forecast

158
Thank you.

159