Presented by:

STOCK VALUATION OF PT TIGA PILAR Aglentia Dwi Fitri / 29115030

SEJAHTERA FOOD TBK AFTER DIVESTITURE Thesis Advisor:
OF RICE BUSINESS Dr. Ir. Subiakto Soekarno, MBA, RFA,
QWP, CFP
INTRODUCTION

BUSINESS ISSUES
EXPLORATION

BUSINESS
SOLUTION

CONCLUSION
 BACKGROUND

donesia has the highest population in F&B industry contributes the

ASEAN largest GDP for non-oil and gas
industry

In 2015-2035, the gov’t established

Lucrative market for F&B players
the F&B industry as a priority for
because the products are basic human
industrial development
needs

Indonesia has become a promising

F&B market such as AISA for
investment

3
COMPANY PROFILE

Business Lines

TPS FOOD TPS RICE

PT Tiga Pilar Sejahtera (TPS) PT Dunia Pangan (DP)

PT Poly Meditra Indonesia (PMI)

PT Jatisari Srirejeki (JSR)

PT Balaraja Bisco Paloma (BBP)

PT Indo Beras Unggul
Established in 1992 (IBU)

PT Putra Taro Paloma (PTP) PT Sukses Abadi Karya Inti

(SAKTI)

Listed in IDX in 2003

PT Subafood Pangan Jaya (SPJ)

PT Surya Cakra Sejahtera (SCS)

4
 • Decline revenue in rice business.
BUSINESS ISSUE • High COGS and opex in rice
business

DIVESTITURE STRATEGY
Approved by the shareholder
AISA suffered at GMS on Nov 2nd, 2017
loss in 2017
AISA will lose 61% of its
revenue
Can’t pay
debt
Sold subsidized To observe about AISA’s
rice with premium future financial and stock
label performance after
Decline Stock Price divestiture for investor
interest

Close price plunged to 400 points

from open price on July 21th, 2017

5
 INTRODUCTION

Research Objective Research Limitation

Insight for investors whether the shares of AISA
is worth to buy, sell or hold after the company
divest its rice business
1. Secondary data in Dec 2013 -Dec 2017 from
the company's annual financial report and
data assumptions
2. Investor’s point of view
3. Limited on stock valuation due to the
company’s divestiture strategy
4. Not concern about internal political issues

6
 Business Issue

External Analysis Internal Analysis

Macroeconomic Company’s Financial Corporate Governance

CONCEPTUAL FRAMEWORK

Industry Analysis
Condition Ratio Analysis

SWOT Analysis Risk Analysis

Root Cause:
The fraud case in their rice
business which creates negative
perspective from the public

Divest Rice Business

-Absolute Valuation
Stock Valuation
-Relative Valuation

Recommendation
EXTERNAL ANALYSIS (MACRO ENVIRONMENT)
Household consumption is predicted to
Indonesia GDP Growth increase in 2018 (Ministry of finance)
2016 2017 2018

5.03% 5.07% 5.3%

Source: BI
Demand driven
Prediction

Impact = Market opportunity

8
 EXTERNAL ANALYSIS
Threat of New Entrants - Low
+ Capital requirement
+ Government regulations
+ Access to distribution channel
+ Brand Equity
Bargaining Power of Supplier – Moderate
- Dependence to supplier for raw material + Product Characteristic
+ Supported by Government
Bargaining Power of Buyer – High
- Number of Buyer
- Buyer Switching Products
Threat of Product Substitutes – Moderate
to High
- Change in behavior makes people
concern about quality
Competitive Rivalry - High
- Number of Competitors (Local and
Foreign)
- Relative industry growth
The industry condition is competitive for
the company whose already established
in the market
9
FINANCIAL RATIOS BEFORE DIVESTITURE 3.00
AISA's Liquidity Ratios

2.66
400.00%
AISA's Debt Ratios

3.34
3.48

3.09
2.50 2.38 300.00%

2.00
1.83 200.00%
1.75 156.24%
1.62
1.55 128.41%
117.02%
1.50 105.63%
100.00%
1.16 60.97% 53.92% 56.22% 51.37%
1.05 1.02
1.00
0.80 0.81
0.00%
2017 2016 2015 2014
0.50
0.21 0.23 -100.00%
0.12
0.05
0.00 -1.31

2017 2016 2015 2014 2013 -200.00%

Current Ratio Quick Ratio Cash Ratio Debt Ratio Debt to Equity Ratio Time Interest Earned Ratio

Industry's Liquidity Ratios Industry's Debt Ratios

2.00 800.00%
7.37
1.76
1.80 700.00%

1.60 600.00%

1.37
1.40
500.00%

1.20 1.16
400.00%

1.00
300.00%
0.80
0.80
200.00% 156.24%
0.60
90.20%
100.00% 60.97%
0.39 46.36%
0.40
0.00%
0.20 Debt Ratio Debt to equity ratio Time Interest Earned Ratio
0.05
-100.00%
0.00
-1.31
current ratio quick ratio cash ratio -200.00%

avg. industry AISA Avg. Industry AISA

FINANCIAL RATIOS BEFORE DIVESTITURE
AISA's Profitabillity Ratios AISA's Market Ratios
30.00%
25.00
25.72%

21.19%
19.58% 20.25% 20.33
20.00% 20.00
16.87%

12.73% 13.22%
12.30%
10.99% 10.54%
9.42%
10.00% 7.77% 15.00
7.35%
6.22%
5.13%
4.12% 12.04
10.55
0.00% 10.00
2017 2016 2015 2014

-10.00% 5.00
-9.71%
-11.15% 1.88
1.47 0.98
0.45
-20.00% -17.21% 0.00
2017 2016 2015 2014
-24.87% -2.78
-30.00%
-5.00

Operating Profit Margin Net Profit Margin ROA ROE Gross Profit Margin Price/Earning Ratio Market/Book Ratio

Industry's Profitabillity Ratios Industry's Market Ratio

30.00% 25
25.49% 23.41

20.00% 20

12.73%
10.35%
10.00% 7.50% 15
6.64% 5.87%

0.00% 10
Operating Profit Net Profit Margin ROA ROE Gross Profit Margin
Margin
-10.00% 5
-9.71% 2.82
-11.15%
0.45
-20.00% -17.21% 0
Price/Earning Ratio Market/Book Ratio
-24.87% -2.78
-30.00% -5

avg. industry AISA avg. industry AISA

INTERNAL ANALYSIS

Transparency Accountability
+ Information disclosure in AR + Have governance bodies with
- Missed deadline in AR public release each responsibilities.
- Poor internal committee audit

Responsibility ASIA has not optimal

+ Corporate Social Responsibility in implementing GCG
- Currently, the subsidiary exposed a fraud case in its rice subsidiary

Independency Fairness
- The personal interest of PT Indo Beras + The company always involve
Unggul director can harm the stakeholder shareholders in decision-making in GMS

12
SWOT ANALYSIS

STRENGTHS
1. Good experience in F&B sector.
2. Wide distribution network, always grow
from year to year.
3. Good management waste system.
WEAKNESSES
1. High COGS and opex in rice business.
2. Highest financial risk among its
competitors.
3. Not optimal in implementing GCG and
not optimal in mitigating risk of integrity.

SWOT
Analysis

OPPORTUNITIES THREATS
1. High number of total population in 1. Negative perspective from investors
Indonesia. about company that engaged in
2. The prediction of household corruption or fraud.
consumption. 2. Many players in F&B sector.

13
 DIVESTITURE

Advantage
Improve the company’s performance because AISA can cut the costs
and expenses in rice business, so the company can quickly “stop the
bleeding”

Disadvantage

The company will lose the largest revenue contribution from its rice
business

15
DIVESTITURE

Before Divestiture After Divestiture

Total Assets = IDR 8,724,734 Total Assets = IDR 5,446,598
Total Liabilities = IDR 5,319,855 Total Liabilities= IDR 2,423,616
Total Equity = IDR 3,404,87 Total Equity = IDR 3,022,982

Sell = IDR 3,500,000

Total Assets RB = IDR 3,881,898
Capital Loss = IDR (381,898)

Total Liabilities= IDR 2,896,239

Cash = IDR 603,761

16
 RATIOS AFTER DIVESTITURE 180.00%
Solvency Ratios
40.0%
Profitablility Ratios
35.30% 35.30% 35.30% 35.30% 35.30% 35.30% 35.30% 35.30% 35.30% 35.30%
156.24%
160.00%

30.0%
140.00%
25.49%

120.00% 110.17% 109.91%

107.90% 107.38%
103.00% 102.92% 20.0%
97.72% 96.90%
100.00% 92.12% 90.20% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80%
86.24%
12.7%
80.00% 10.37% 10.37% 10.37% 10.37% 10.37% 10.37% 10.37% 10.37% 10.37% 10.37%
60.97% 10.0% 7.50%
6.64%
60.00% 49.42% 50.74% 51.90% 52.42% 52.36% 51.78% 50.72% 49.21%
46.31% 47.95% 46.36%

40.00%
0.0%

20.00% 2017 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F 2026F 2027F Avg
industry
0.00% -10.0% 2017
2017 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F 2026F 2027F Avg -11.2%
industry
2017 -20.0% -17.2%

Debt Ratio Debt to Equity Ratio Operating Profit Margin Net Profit Margin Gross Profit Margin
CONCEPTUAL FRAMEWORK

Solvency Ratios Profitablility Ratios

10.00 15.0%
11.79% 12.03% 12.01% 11.73%
10.68% 11.25% 11.24%
10.06% 10.59% 10.35%
9.42%
10.0%
7.995 7.995 7.995 7.995 7.995 7.995 7.995 7.995 7.995 7.995
8.00 5.24% 5.40% 5.54% 5.67% 5.73% 5.72% 5.66% 5.54% 5.38% 5.87%
7.37 5.06%
5.0%

6.00 0.0%
2017 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F 2026F 2027F Avg
FINANCIAL

-5.0% industry
4.00 2017
-10.0%
-9.7%

2.00 -15.0%

-20.0%
0.00
2017 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F 2026F 2027F Avg -25.0%
-24.9%
industry
-1.311
-2.00 2017 -30.0%

Time Interest Earned Ratio ROA ROE

 RATIOS AFTER DIVESTITURE
Liquidity Ratios
2.0 1.8
1.7 1.8
1.8 1.7 1.7
1.6 1.5 1.5 1.6
1.6 1.5 1.5
1.4 1.4 1.4
1.4 1.3 1.3
1.2 1.2 1.2 1.2
1.2 1.2 1.2
1.2
1.0
0.8
0.8 0.6 0.6
0.6 0.6
0.6 0.5 0.4 0.5
0.4 0.4 0.4 0.4
0.4
0.2 0.05
0.0
2017 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F 2026F 2027F Avg
industry
2017

Current Ratio Quick Ratio Cash Ratio

CONCEPTUAL FRAMEWORK

Activity Ratios Average Collection Period

5.00 180

4.44
4.50 160 157

4.00
140
3.48 3.48 3.48 3.48 3.48 3.48 3.48 3.48 3.48 3.48
3.50 123 123 123 123 123 123 123 123 123 123
3.06
120
3.00
FINANCIAL

2.50 100

2.00
80
68
1.50
0.98 60
1.00 0.71 0.72 0.73 0.75 0.75 0.75 0.75 0.73 0.72
0.69
0.56
0.50 40

0.00 20
2017 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F 2026F 2027F Avg
industry
2017 0
2017 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F 2026F 2027F Avg
Inventory Turnover Total Assets Turnover industry
2017
ABSOLUTE VALUATION

Estimating WACC Modified DCF that reflect the possibility of

distress (to avoid overvalue valuation)
WACC
Debt Weight 46.31%
Equity Weight 53.69% FCFF : Since the company has high leverage
After Tax Cost of Debt (Kd) 8.08% and expect to change the debt over time
Cost of Equity (Ke) 18.59%
WACC 13.72%
Cost of Debt
Risk Free Rate (Rf) 7.79% Estimating Growth
Country Spread 2.26%
Rating Aa2/AA  Uses CAGR revenue only from food business
Firm Default Spread 0.72%
Pre Tax Cost of Debt 10.77%  Uses 3 stage growth because AISA has grown
Tax 25% significantly and has significant barriers to entry
After Tax Cost of Debt (Kd) 8.08%
into F&B industry
Cost of Equity (Ke)
Risk Free Rate (Rf) 7.79%  Terminal growth rate: 5.3% (BI prediction in 2018)
Equity Risk Premium (Rp) 7.62%
Market Return (Rm) 15.41%
Beta 1.417
Cost of Equity (Ke) 18.59%

19
ABSOLUTE VALUATION

Free Cash Flow to the Firm

in million IDR
2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F 2026F 2027F
EBIT 479,176 569,072 675,834 802,624 953,201 1,106,366 1,254,358 1,388,376 1,499,337 1,578,802
Income Tax Expenses 104,810 124,473 147,825 175,558 208,494 241,996 274,366 303,680 327,950 345,332
Depreciation and Amortization 82,767 98,294 116,735 138,635 164,644 191,100 216,662 239,811 258,977 272,702
Net Capex (277,890) (330,024) (391,939) (465,469) (552,793) (641,619) (727,444) (805,166) (869,516) (915,600)
FCFF 179,242 212,869 252,805 300,233 356,558 413,852 469,210 519,341 560,848 590,573
Terminal Value 7,386,217
Total FCF 178,525 212,018 251,794 299,032 355,132 412,196 467,333 517,264 558,604 7,944,882
PV of FCFF 156,988 163,947 171,215 178,805 186,731 190,589 190,014 184,942 175,628 2,196,560
Firm Value 3,795,419

Intrinsic Value
Less: current outstanding debt 1,719,047
Equity value 1,994,796
Current shares outstanding 3,219
Intrinsic value per share 620
Buying Price as per May 31th, 2018 244

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RELATIVE VALUATION

Price Earnings Ratio

Price-to-Earnings Ratio
Companies 2015 2016 2017 2018F Target Price
AISA 12.04 10.55 -2.78 1.72 778
ICBP 23.99 26.22 26.27
INDF 14.05 15.77 15.51
CEKA 3.35 2.88 6.87
MYOR 17.36 26.23 28.20
ROTI 23.35 28.67 31.70
SKBM 21.48 21.33 47.67
SKLT 12.01 9.90 33.14
STTP 21.23 23.98 26.42
ULTJ 38.29 24.64 21.06
Average Industry 18.72 19.02 23.41 23.70

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RISK ANALYSIS AFTER DIVESTITURE

Operational Finance
HR IT
Identification Identification
• AISA will lose 61% of Identification The complexity of Identification
its revenue Loss of important financial decomposition Access to internal
personnel and overall process to prepare corporate system by
reduction in resources financial closure in buyers
divestiture
Mitigation
Mitigation Mitigation Mitigation
Review the database
• Optimize the Formulate an HR Need collaboration that can be accessed by
business in food and separation strategy between separation its former business and
beverage since the explicitly including the leader and financial make an agreement
industry condition is transition process leader within the about limits regarding
quite good company to obtain an privacy information
effective billing structure policy access
at closing

23
CONCLUSION AND RECOMMENDATION Conclusion  The company should implement
divestiture strategy because it will
make AISA’s financial performance
 F&B industry is a promising market
healthier. AISA’s target price in 2018
with the prediction of household
is IDR 620 with 154% potential
consumption and AISA also has a
upside that consider undervalue.
strong distribution channel that
become a competitive advantage.
 AISA has to improve the
implementation of GCG to increase Recommendation
the investor confidence level and
anticipate the fraud case will happen
 Buy AISA’s share after divestiture
again.
Thank You.