02 May 2019

Bisi International (BISI IJ)

Results Note
BUY (Unchanged)

Stock Data A good start this year

Target price (Rp) Rp1,750
Earnings increased 129% yoy in 1Q19.
Equity | Indonesia | Commodities

Prior TP (Rp) Rp1,750

Shareprice (Rp) Rp1,505 BISI’s inventory remained high to mitigate bad weather risks.
Upside/downside (%) +16.3 Margin to improve as corn seed demand remained increasing.
Sharesoutstanding (m) 3,000 Maintain Buy rating with 16% to TP of Rp1,750.
Marketcap. (US$ m) 317
Free float (%) 45.9 Good results in 1Q19. BISI recorded net profit of Rp75.2bn in 1Q19, down 55%
Avg. 6m dailyT/O (US$ m) 0.0 qoq (due to high base in 4Q18) but jumped 129% yoy, accounting for 16% of
consensus and our forecast for FY19F. Historically, BISI posted 60%-70% of its
Price Performance
earnings in 2Q and 3Q. Thus, we see these results inline with our estimate.
3M 6M 12M Operating profit reached Rp90bn in 1Q19, down 55% qoq but jumped 204% yoy,
Absolute (%) 4.5 3.8 -21.2 accounting for 16% of the consensus and 15% of our forecast for FY19F. Note
Relative to JCI (%) 7.0 -3.9 -29.1 that last year, BISI’s operating profit in 1Q18 represent only 6% of total operating
profit in FY18. BISI recorded lower revenues of Rp554bn in 1Q19, down 23% qoq
52w high/low (Rp) 1,925 - 1,350
but up 15% yoy to, accounting for 22% of our and consensus’ forecasts for
115 FY19F.
110
105
100 BISI maintained high inventory to mitigate bad weather risk. BISI
95
90 maintained its high inventory level of Rp1.06tn in 1Q19 to anticipate bad weather
85 risks. Last year, BISI recorded poor performance in 1H18 as production fell due to
80
75 bad weather. Despite the company managed to catch up production in 2H18, it
70 missed the opportunity to sell higher volumes in the first corn planting season
Oct-18

Mar-19
May-18
May-18
Jun-18
Jul-18
Jul-18

Jan-19
Jan-19
Aug-18
Sep-18
Sep-18

Nov-18
Nov-18
Dec-18

Apr-19
Apr-19
Feb-19

which occurs usually in the second quarter. Thus, BISI decided to improve its
BISI-Rebase JCI Index-Rebase inventory level in Dec’18 to anticipate bad weather risks earlier this year. These
inventories would help BISI to capture the opportunity to sell high volumes in
Major Shareholders April-June planting season despite possible low productivity if bad weather occurs.
Agrindo Pratama 31.0%
Midsummer Corp 23.1% Margin to improve as demand would remain high. We forecast BISI would
book revenues growth of 11% yoy in FY19F which would allow margins to improve
given the nature of corn seed business which has high operating leverage. We
Estimate Change; Vs. Consensus
forecast BISI’s gross margin would increase to 41.6% in FY19F (from 37.9% in
2019F 2020F FY18) with operating margin of 24.6% (vs. FY18: 22%). Corn seed demand would
Latest EPS (Rp) 154 174 remain improving on the back of government seed provision program. Even after
Vs. Prior EPS (%) 0.0 0.0 the seed provisioning program ended, we believe traditional farmers which
Vs. Consensus (%) 1.0 2.1 previously obtained corn seed from the government, would become the new
customers of BISI’s corn seed due to the experience of higher production yield.
Source: Bloomberg

Maintain Buy with 16% potential upside to unchanged TP of Rp1,750. We

maintain our Buy recommendation for BISI with 16% potential upside to our
unchanged DCF-based (WACC: 13.1%; TG: 4%) target price of Rp1,750. Our TP
implies FY19F-20F P/E of 11.4x-10.1x, respectively.

Year To 31 Dec 2017A 2018A 2019F 2020F 2021F

Revenue (RpBn) 2,310 2,266 2,506 2,826 3,211
EBITDA (RpBn) 524 516 604 682 769
EBITDA Growth (%) 10.9 (1.5) 17.2 12.9 12.7
Net Profit (RpBn) 403 404 462 521 587
EPS (Rp) 134 135 154 174 196
EPS Growth (%) 19.9 0.2 14.4 12.8 12.7
Net Gearing (%) (22.1) 0.2 (27.6) (30.7) (32.4)
PER (x) 11.2 11.2 9.8 8.7 7.7
Frederick Daniel Tanggela PBV (x) 2.1 2.0 1.7 1.5 1.4
PT Indo Premier Sekuritas Dividend Yield (%) 5.8 6.6 3.6 4.1 4.6
frederick.daniel@ipc.co.id EV/EBITDA (x) 9.5 8.7 8.7 7.9 7.3
+62 21 5793 1170 Source: BISI, IndoPremier Share Price Closing as of : 02-May-2019

Refer to Important disclosures in the last page of this report

BISI IJ Results Note

Fig. 1: Rainfall in February 2019 Fig. 2: Revenue breakdown (Rp Bn)

corn seed fruit & vegie rice seed fertilizer & pesticide other

3,500 3,211

3,000 2,826
2,506
2,500 2,311 2,266

1,852
2,000
1,438
1,500

1,000

500

-
2015 2016 2017 2018 2019F 2020F 2021F

Source: BMKG Source: BISI, IndoPremier

Fig. 3: Revenue breakdown Fig. 4: Corn seed sales volumes (k tons)

2018
50
other, 2% 43.1

40 37.5
32.6
pesticide, 33%
30 28.3
26.7

18.6
20
corn seed, 55% 14.3

10

horticulture
seed, 10% -
2015 2016 2017 2018 2019F 2020F 2021F

Source: BISI, IndoPremier Source: BISI, IndoPremier

Fig. 5: Corn seed sales (Rp Bn) Fig. 6: Pesticide sales (Rp Bn)

2500
1,200

1,951 941 969

2000 1,000 914 913
1,601 776
800 756
1500 1,300 1,313
1,166 568
600
1000 816
599 400

500
200

0 -
2015 2016 2017 2018 2019F 2020F 2021F 2015 2016 2017F 2018 2019F 2020F 2021F

Source: BISI, IndoPremier Source: BISI, IndoPremier

Refer to Important disclosures in the last page of this report 2

BISI IJ Results Note

Fig. 7: 1Q19 results summary table

(Rp Bn) 1Q19 1Q18 % Y-Y 1Q19 % Q-Q % Y-Y vs. cons (%) vs. ours (%)
Revenues 554.4 483.2 14.7 554.4 (22.7) 14.7 22.1 22.1
COGS 403.7 397.2 1.6 403.7 7.9 1.6
Gross profit 150.7 86.0 75.3 150.7 (56.1) 75.3 14.5 14.4
G&A expenses 25.4 17.9 42.1 25.4 (51.5) 42.1
Selling expenses 35.4 38.5 (8.0) 35.4 (61.0) (8.0)
Operating profit 89.9 29.6 203.9 89.9 (55.1) 203.9 15.9 14.6
Net interest inc. (exp) (1.6) 3.7 nm (1.6) nm nm
Forex gain (loss) 0.8 (0.2) nm 0.8 (7.7) (589.3)
Other 7.4 9.5 (22.4) 7.4 (27.8) (22.4)
Pretax profit 96.5 42.6 126.4 96.5 (54.2) 126.4 15.5 15.5
Tax 21.2 9.8 117.1 21.2 (50.1) 117.1
Minority Interest 0.0 0.0 20.0 0.0 50.0 20.0
Net profit 75.2 32.8 129.2 75.2 (55.3) 129.2 16.3 16.3

GPM (%) 27.2 17.8 27.2

OPM (%) 16.2 6.1 16.2
Pretax mgn (%) 17.4 8.8 17.4
NPM (%) 13.6 6.8 13.6
Source: BISI, IndoPremier

Refer to Important disclosures in the last page of this report 3

BISI IJ Results Note

Year To 31 Dec (RpBn) 2017A 2018A 2019F 2020F 2021F

Income Statement

Net Revenue 2,310 2,266 2,506 2,826 3,211

Cost of Sales (1,430) (1,407) (1,462) (1,649) (1,878)
Gross Profit 880 859 1,043 1,178 1,333
SG&A Expenses (391) (378) (478) (539) (612)
Operating Profit 489 481 565 639 721
Net Interest 18 8 8 8 8
Forex Gain (Loss) 0 0 0 0 0
Others-Net 11 17 51 58 65
Pre-Tax Income 519 505 624 704 794
Income Tax (116) (102) (162) (183) (206)
Minorities 0 0 0 0 0
Net Income 403 404 462 521 587

Balance Sheet

Cash & Equivalent 536 94 719 904 1,076

Receivable 833 929 968 1,014 1,153

Inventory 634 1,112 681 768 823

Other Current Assets 39 32 34 38 43

Total Current Assets 2,042 2,168 2,401 2,724 3,095

Fixed Assets - Net 512 499 549 604 664

Goodwill 0 0 0 0 0

Non Current Assets 35 60 24 27 31

Total Assets 2,622 2,765 3,029 3,417 3,860

ST Loans 50 100 0 0 0

Payable 139 69 0 181 206

Other Payables 173 227 198 222 253

Current Portion of LT Loans 0 0 0 0 0

Total Current Liab. 362 395 358 403 458

Long Term Loans 0 0 0 0 0

Other LT Liab. 60 60 66 73 81

Total Liabilities 422 455 424 476 540

Equity 405 405 400 400 400

Retained Earnings 1,795 1,905 2,205 2,541 2,920

Minority Interest 0 0 0 0 0

Total SHE + Minority Int. 2,200 2,310 2,605 2,941 3,321

Total Liabilities & Equity 2,622 2,765 3,029 3,417 3,860

Source: BISI, IndoPremier

Refer to Important disclosures in the last page of this report 4

BISI IJ Results Note

Year to 31 Dec 2017A 2018A 2019F 2020F 2021F

Cash Flow

Net Income (Excl.Extraordinary&Min.Int) 403 404 462 521 588

Depr. & Amortization 22 33 33 36 40

Changes in Working Capital 196 (644) 491 (99) (152)

Others (17) (25) 40 (42) (1)

Cash Flow From Operating 604 (232) 1,026 416 475

Capital Expenditure (234) (45) (46) (94) (104)

Others 19 9 9 9 9

Cash Flow From Investing (216) (36) (37) (85) (95)

Loans 50 50 (100) 0 0

Equity 0 0 0 0 0

Dividends (264) (300) (162) (185) (208)

Others 0 (1) (7) (1) (1)

Cash Flow From Financing (214) (251) (269) (186) (209)

Changes in Cash 175 (519) 720 145 170

Financial Ratios

Gross Margin (%) 38.1 37.9 41.6 41.7 41.5

Operating Margin (%) 21.2 21.2 22.6 22.6 22.4

Pre-Tax Margin (%) 22.5 22.3 24.9 24.9 24.7

Net Margin (%) 17.5 17.8 18.4 18.4 18.3

ROA (%) 16.0 15.0 15.9 16.2 16.1

ROE (%) 18.9 17.9 18.8 18.8 18.8

ROIC (%) 19.3 17.7 18.8 19.1 19.1

Acct. Receivables TO (days) 140.5 141.7 137.6 127.1 122.2

Acct. Receivables - Other TO (days) 0.3 0.3 0.6 0.9 0.9

Inventory TO (days) 2.2 1.6 1.6 2.3 2.4

Payable TO (days) 33.3 26.9 28.6 37.7 37.6

Acct. Payables - Other TO (days) 9.4 10.0 11.6 12.3 12.2

Debt to Equity (%) 2.3 4.3 0.0 0.0 0.0

Interest Coverage Ratio (x) 0.0 0.0 0.0 0.0 0.0

Net Gearing (%) (22.1) 0.2 (27.6) (30.7) (32.4)

Source: BISI, IndoPremier

Refer to Important disclosures in the last page of this report 5

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

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

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

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