J.P. 摩根-亚太地区-消费品行业-印尼消费者：购物篮里并无太多东西-2019.2.1-65页.pdf

Asia Pacific Equity Research01 March 2019Equity Ratings and Price TargetsMkt CapPriceRatingPrice TargetCompanyTicker($mn)CCYPriceCurPrevCurEnd DatePrevEnd DatePT Gudang Garam TbkGGRM IJ11,712.52IDR85,400UWn/c78,000Dec-1961,000Jun-19PT Hanjaya Mandala Sampoerna TbkHMSP IJ31,506.38IDR3,800OWN4,900Dec-193,600Jun-19Unilever Indonesia TbkUNVR IJ26,472.69IDR48,675Nn/c46,500Dec-1943,000Jun-19IndofoodINDF IJ4,427.81IDR7,075NOW8,000Dec-198,800Jun-19Indofood CBPICBP IJ8,499.64IDR10,225UWOW9,050Dec-1910,200Jun-19Source:Company data,Bloomberg,J.P.Morgan estimates.n/c=no change.All prices as of 28 Feb 19.Indonesia ConsumerNot much in the shopping basketIndonesiaIndonesia Automotive&consumerBenny Kurniawan,CFA AC(62-21)5291 PT J.P.Morgan Sekuritas IndonesiaJeanette Yutan(63-2)878-J.P.Morgan Securities Philippines,Inc.Ajay Mirchandani(65)6882-J.P.Morgan Securities Singapore Private LimitedUtkarsh Mehrotra(65)6882-J.P.Morgan Securities Singapore Private LimitedSee page 60 for analyst certification and important disclosures,including non-US analyst disclosures.J.P.Morgan does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.We assume coverage on five Indonesian consumer stocks with a cautious view.We believe that most of the expected improvement in fundamentals this year is already in the price,leaving possible downside risks from post-election hard reforms like fuel prices/excise in 2H19.We return to bottom-up stock picking and see only select pockets of opportunities in the sector,particularly quality names with undemanding valuations.Our only OW isHMSP.We are UW on ICBP&GGRM and Neutral on UNVR&INDF.Expect election year to aid consumer companies top-line growth.Consumer companies top-line growth has decelerated to 0.8x nominal GDP in the last four years vs 1x historically,as tougher macroeconomic conditions including electricity subsidy removals and low commodity prices in 2016 weighed on growth.Election years typically see a consumption pick-up and we anticipate accelerating top-line growth in the next two years driven by better macro,higher commodity prices and better government spending.We forecast the five companies under coverage posting 8.6%revenue CAGR in 2018-20E vs 7.3%from 2014-18.However,cigarette companies sales could decelerate this year due to zero excise hikes,which could result in a slower ASP increase.HMSP is our only OW:After a decent rally(10-30%in the stocks that we cover vs JCI+10%),we think most of this sector improvement is priced in.We downgrade ICBP to UW despite liking its business model and innovative launches,as we expect noodle margins to trend downwards even as competition in other product lines remains intense.We prefer INDF,but outperformance could be limited by ICBP.We are cautious on GGRM on weak evidence of translating strong top-line growth to profits.Our only OW in the sector is HMSP,driven by improving market share and strong pricing power.We are Neutral on UNVR despite improving topline growth as valuation looks demanding.Risks to our thesis.Hard reforms in 2H19,including a fuel price hike and cigarette excise hike could deter consumer sentiment in our view.Sudden depreciation of IDR could impact margins,as some costs are dollar-linked.Lastly,unfavorable election results could be a wild card.2Asia Pacific Equity Research01 March 2019Benny Kurniawan,CFA(62-21)5291 Table of ContentsKey Charts.3Cautious on consumer space-improvement largely in price.5Supportive demographics key for consumption structural growth.5What are consumers spending their money on?.8Noodles limited volume growth as penetration is already high;pricing and innovation is key.10Dairy Strong growth story countered by immense competition.13Cigarettes one of the few growth markets.14Excise tax-volume growths main opponent.15Indonesia:Kretek(clove)cigarettes dominates the market.17Market Structure turning oligopolistic.18Our view on the Industry:Neutral.18PT Gudang Garam Tbk.20PT Hanjaya Mandala Sampoerna Tbk.27Unilever Indonesia Tbk.35Indofood.43Indofood CBP.513Asia Pacific Equity Research01 March 2019Benny Kurniawan,CFA(62-21)5291 Key Charts Figure 1:HMSP has lagged JCI in the last one yearSource:BloombergFigure 2:due to poor performance(particularly in 1Q18 by A-Mild);but we expect volumes to recover in 1Q19 on a low baseSource:PMI releaseFigure 3:HMSP has decent ROIC even post rights issueSource:J.P.Morgan estimates,Company dataFigure 4:.and is now trading at a steep discount vs historical averageSource:BloombergFigure 5:We are UW ICBP as we see risk to ICBPs noodle EBIT margin on rising soft commodity prices.Source:Bloomberg,J.P.Morgan estimatesFigure 6:.and other divisions are also facing tough competition,resulting in lossesSource:Bloomberg,J.P.Morgan estimates 80 90 100 110 120 130 140 150Jan-16Mar-16May-16Jul-16Sep-16Nov-16Jan-17Mar-17May-17Jul-17Sep-17Nov-17Jan-18Mar-18May-18Jul-18Sep-18Nov-18Jan-19HMSPJCI 8.0 9.0 10.0 11.0 12.0 13.0 14.01Q152Q153Q154Q151Q162Q163Q164Q161Q172Q173Q174Q171Q182Q183Q184Q18Sampoerna A volume(bn sticks)66.9%68.3%63.0%34.5%41.3%45.4%47.3%54.2%55.7%0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%20122013201420152016A2017A2018E2019E2020EROIC 25.0 27.0 29.0 31.0 33.0 35.0 37.0 39.0 41.0 43.0 45.0Jul-15Sep-15Nov-15Jan-16Mar-16May-16Jul-16Sep-16Nov-16Jan-17Mar-17May-17Jul-17Sep-17Nov-17Jan-18Mar-18May-18Jul-18Sep-18Nov-18Jan-191-yr forward PEAverage+1 sd-1 sd13%14%15%16%17%18%19%20%21%22%4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0FY10A FY11A FY12A FY13A FY14A FY15A FY16A FY17A FY18eFY19e FY20eIntl wheat priceICBP Noodle EBIT margin(400)(300)(200)(100)-100 20020112012201320142015201620172018E2019E2020ESnack Food EBIT(IDRbn)Beverage EBIT(IDRbn)4Asia Pacific Equity Research01 March 2019Benny Kurniawan,CFA(62-21)5291 Figure 7:We are Neutral on INDF as we think discount to ICBP should narrow on improving CPO pricesSource:BloombergFigure 8:.but INDF outperformance to JCI in the last three cycles relied heavily on ICBPSource:BloombergFigure 9:We are UW GGRM despite better industry outlook as companys profitability lags strong top-line growthSource:Company DataFigure 10:GGRM valuation discount to HMSP is almost at its narrowest level in the last 2 yearsSource:BloombergFigure 11:UNVRs outperformance in the last 8 years was largely explained by its cash conversion cycle turning negativeSource:Company Data,J.P.Morgan estimatesFigure 12:We are Neutral as cash conversion cycle is now back positive and valuation looks stretched Source:BloombergTable 1:Our Indonesia consumer picks HMSP our only OWMkt cap(USDbn)JPM ratingPEEPS growthDiv YieldROEADTV(USDmn)Upside/downside19E20E19E20E19E19E6 monthsHMSP29.3%31.5OW27.524.916.1%10.4%3.0%41.3%6.0INDF5.3%4.8N13.211.926.1%10.8%3.0%14.0%3.6UNVR-7.0%27.3N48.544.7-13.7%8.6%1.9%100.0%6.9ICBP-13.0%8.7UW26.424.4-1.9%8.0%1.9%18.7%3.2GGRM-7.7%11.6UW17.316.612.7%4.0%2.6%18.5%5.0Source:J.P.Morgan estimates and Bloomberg 1,500 2,000 2,500 3,000 3,500 4,000 4,500-10%0%10%20%30%40%50%60%Jan-11May-11Sep-11Jan-12May-12Sep-12Jan-13May-13Sep-13Jan-14May-14Sep-14Jan-15May-15Sep-15Jan-16May-16Sep-16Jan-17May-17Sep-17Jan-18May-18Sep-18Jan-19INDF disc to ICBPCPO Spot(rhs,inversely correlated)(50)(40)(30)(20)(10)-10 20(20)30 80 130 180Oct-10Feb-11Jun-11Oct-11Feb-12Jun-12Oct-12Feb-13Jun-13Oct-13Feb-14Jun-14Oct-14Feb-15Jun-15Oct-15Feb-16Jun-16Oct-16Feb-17Jun-17Oct-17Feb-18Jun-18Oct-18ICBP-JCIINDF-JCI(rhs)80 100 120 140 160 180 200 220 240 260 2801Q112Q113Q114Q111Q122Q123Q124Q121Q132Q133Q134Q131Q142Q143Q144Q141Q152Q153Q154Q151Q162Q163Q164Q161Q172Q173Q174Q171Q182Q183Q18SalesGPEBIT-20%-10%0%10%20%30%40%50%60%40%42%44%46%48%50%52%54%56%58%60%Aug-15Oct-15Dec-15Feb-16Apr-16Jun-16Aug-16Oct-16Dec-16Feb-17Apr-17Jun-17Aug-17Oct-17Dec-17Feb-18Apr-18Jun-18Aug-18Oct-18Dec-18Feb-19GGRM disc to HMSPone-year return by holding GGRM stock(rhs)(30.0)(20.0)(10.0)-10.0 20.0 30.0 40.0(50)-50 100 150 200 250Mar-10Sep-10Mar-11Sep-11Mar-12Sep-12Mar-13Sep-13Mar-14Sep-14Mar-15Sep-15Mar-16Sep-16Mar-17Sep-17Mar-18Sep-18Dec-19UNVR outerperformance to JCICash conversion cycle(inverted,rhs)JPMs FY19 est.of 4 days253035404550556065Jan-13Apr-13Jul-13Oct-13Jan-14Apr-14Jul-14Oct-14Jan-15Apr-15Jul-15Oct-15Jan-16Apr-16Jul-16Oct-16Jan-17Apr-17Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-191 year forward PEAvcerage+1 sd-1 sd5Asia Pacific Equity Research01 March 2019Benny Kurniawan,CFA(62-21)5291 Cautious on consumer space-improvement largely in priceWe believe that improvement driven by election related spending and increase in government spending is largely in the price.The five companies under our coverage are up 11-32%since 3Q results in late Oct-18(JCI up 11%),with only HMSP down 2%on technical factors.While we think there are select pockets of opportunities for this year,we think rerating on better top-line growth driven by election-related spending is already in the price.Elections looming,what are the downside risks?We can think of a few.Indonesia is currently a net importer of oil and the government is still subsidizing both electricity(900watts and below)and fuel(gasoline,diesel and kerosene),hurting both the current and fiscal accounts.We believe there might be risks of potential hard reforms once the election is over,especially if oil prices make further gains from current levels.Several of the hard reforms that could impact our stock under coverage include(1)removing electricity price subsidy entirely(2)raising fuel prices and(3)issuing excise tax increase mid-year,all of which are steps which could impact on consumer spending.Thus far,people and the government are still focusing on elections and we think that any expectations on the chances of those events happening have not been formed yet.Nonetheless,for investors with a medium-term outlook or more,we believe these are risks to be aware of.We urge investors to be cautious and stay with quality names with reasonable valuations.The following table shows where we are vs consensus for this year and next.Table 2:Where we are vs consensus on EPSJPM Consensus%diff2018E2019E2020E2018E2019E2020E2018E2019E2020EHMSP1191381521131281384.7%7.2%9.9%GGRM4,3354,8885,0824,2514,9695,5072.0%-1.8%-7.5%ICBP4023944263764094466.7%-3.6%-4.6%INDF457577639465517552-1.6%11.6%15.8%UNVR1,1941,0311,1191,0479941,063n/a3.7%5.2%Source:J.P.Morgan estimates,BloombergSupportive demographics key for consumption structural growthBefore launching into stock specifics,let us start with Indonesias core demographics and selected sectors that we are going to focus on.Constructive demographics,including an increase in productive age population and higher urban population every year should support Indonesias consumption story over the next decade.Indonesias productive age(defined as 15-64 years old)is up from 60%in 1990 to 67.3%in 2017,while the dependent ratio(defined as 64)fell from 40%to 33%.Improvement driven by election-related spending and increase in government spending is largely in the priceOnly HMSP down 2%on technical factors(vs JCI 10%).6Asia Pacific Equity Research01 March 2019Benny Kurniawan,CFA(62-21)5291 Figure 13:With younger consumers,consumption habit changes and companies need to adaptSource:CEICFigure 14:Theres also an increasing urban population which shops through different channelsSource:CEICWith an increase in productive age,we expect consumption to remain resilient in the upcoming years,albeit growth might be smaller in quantum than previous years due to(1)higher base and(2)change in macro-economic structure(less reliant on commodity price).As a result,we expect broad consumption to grow at a slightly slower pace than nominal GDP and hence stock selection will need to revert back to fundamental bottom-up stories.Compiling historical staple companies sales shows that there is generally a good correlation with Nominal GDP.In fact,the average multiplier(Consumer sales/GDP ratio)was closer to 1 at 0.99x in the last 12 years.However,this was buoyed by 2x ratio in 2012 due to the after effects of the commodity boom.The ratio was actually closer to 0.8x in the last 3-4 years,and we believe will stay so in the next few years,signifying a new normal in the Indonesia consumer space.Figure 15:Consumer companies sales vs Nominal GDPSource:CEIC,Company dataFigure 16:Relationship averages 1x but recently dipped to 0.8xSource:CEIC,Company dataConsumer stocks performance in the three cyclesIf we divide Figure 16 into 3 distinct periods(2006 to 2010,2011 to 2014 and 2015 onwards),consumer stocks(represented by the Jakarta consumer sub indexJAKCONS)show interesting characteristics,summarized in this table:35.9%33.1%30.5%29.7%28.7%27.4%60.3%62.6%64.8%65.4%66.4%67.3%3.9%4.3%4.8%4.8%4.9%5.3%0%10%20%30%40%50%60%70%80%90%100%1991199620012006201120176432 37 43 47 51 55 68 63 57 53 49 45 0%10%20%30%40%50%60%70%80%90%100%199119962001200620112017UrbanRural0%5%10%15%20%25%30%Dec-06May-07Oct-07Mar-08Aug-08Jan-09Jun-09Nov-09Apr-10Sep-10Feb-11Jul-11Dec-11May-12Oct-12Mar-13Aug-13Jan-14Jun-14Nov-14Apr-15Sep-15Feb-16Jul-16Dec-16May-17Oct-17Mar-18Aug-18Consumer companies sales(4Qma y/y)Indonesia Nominal GDP-0.50 1.00 1.50 2.00 2.50Dec-06Jun-07Dec-07Jun-08Dec-08Jun-09Dec-09Jun-10Dec-10Jun-11Dec-11Jun-12Dec-12Jun-13Dec-13Jun-14Dec-14Jun-15Dec-15Jun-16Dec-16Jun-17Dec-17Jun-18Consumer companies sales y/y/Nominal GDP y/yWe expect growth to be smaller in quantum than previous years due to(1)higher base and(2)change in macro-economic structure 7Asia Pacific Equity Research01 March 2019Benny Kurniawan,CFA(62-21)5291 Table 3:Summary of JAKCONS 3 period EPS and outperformanceEPS CAGROutperformanceReratingEBITDA margin trajectory1Q06 to 4Q1020.4%92.552.1%from 13%to 17%1Q11 to 4Q146.3%54.753.9%from 17%to 15%1Q15 onwards1.5%(2.3)3.7%flat at 15%Source:BloombergConsumer stocks outperformed massively in the first period(2006-2010),which was supported by the massive 20%EPS CAGR.Consumer stocks in general rerated 52%and EBITDA margin improved significantly.The second period was somewhat perplexing.Consumer stocks outperformed 55%relative to JCI despite modest earnings CAGR and falling EBITDA margin.Much of the outperformance in the period was driven by a single stock,UNVR.We also suspect foreign inflows(USD6.6bn during this period)to drive rerating in consumer stocks The last period,which is 2015 to the present,has seen flattish EPS.This time,investors were noticeably calmer and Indonesia consumer stocks underperformed the broader index by 2%during the period.We believe that this performance in line with the index will continue in 2019 and hence we suggest caution in buying the consumer space,which has seen a decent rally in Nov18-Jan19.We do not see enough catalysts in the space,with the only significant catalyst in the form of increase in government spending already priced in,in our view.8Asia Pacific