Q&A with Manufacturers: TPS Food, Pan Brothers & Semen Indonesia
Food & beverage industry remains one of the most attractive sectors for foreign investors in Indonesia to tap potentials in the 260 million population. Some investors are known in the process of acquiring F&B producers in the country, including one of fast growing companies based in West Java. We’ve also seen increasing investments in garment & textile. New investments in cement, however, might not be expected by existing players due to persistent short-medium term oversupply.
Q&A with AKR Corporindo CEO
AKR Corporindo (AKRA) is one of losers on IDX year-to-date. The stock lost 5.2% as investors realized last year’s gains. Its sales revenue dropped 28.3% in the first half of 2016 due to falling oil prices, but its revenues from industrial estate and property started to pick up. On Monday, Aug 1, we attended public expose of the Company.
Toll Road Projects Update
Toll road development is one of signature projects of Jokowi-Kalla administration. Land acquisition in some areas and financing are still the biggest challenges. Jokowi has appointed new minister of agraria/land, Sofyan Djalil, to replace Ferry Mursyidan Baldan, who was considered too slow in solving land acquisition issues. Jokowi has also appointed the high-profile Sri Mulyani Indrawati as minister of finance, who should ensure continuous support from the State Budget for co-financing of these projects.
Key Highlights from Retail Sector in First Half
Aggressive expansion of convenience stores might have hurt bigger retail formats more in the first half. Alfamart, one of the largest operators of convenience stores, enjoyed strong sales revenue growth of 21.5% even though number of outlets grew only 5.4%. This year’s Lebaran, which was two weeks earlier than last year, meanwhile, contributed to the strong growth of fashion retailers in the second quarter.
SmartFren Continues to Test Sinarmas
PT SmartFren Telecom Tbk (FREN) booked net loss of Rp668 billion in the first half of 2016, down 18% from the corresponding period of 2015 due to high depreciation and amortisation costs. Operating loss ballooned 101% to Rp1.04 trillion, while finance costs continue to test resilience of Sinarmas Group.
Bentoel/BAT Steps Up Competition
Bentoel International Investama (RMBA), the fourth largest cigarette producer controlled by BAT International, has stepped up competition against three majors: HM Sampoerna, Gudang Garam, and Djarum. The Company was still in red with net loss of Rp676 billion in the first half, but it posted the strongest growth in sales.
Indocement, SMGR Lost Further Ground
Aggressive entry of new players hit Semen Indonesia (SMGR) and Indocement Tunggal Prakarsa (INTP), which long dominated the cement market. They both suffered falling sales revenues and operating profit margins in the first half.
Conventional Taxi Operators in First Half: Margins Squeezed More
Blue Bird (BIRD) and Express Transindo (TAXI), two of the largest conventional taxi operators, have released their first half financials. They both suffered from falling sales revenues and squeezed margins. They were hammered more in the second quarter of 2016.
Hospitals in First Half: More Aggressive in Investments
Siloam Hospitals (SILO), the largest operator in private sector, yet to release its first half results, but three other operators listed on Indonesia Stock Exchange (IDX) reported strong performance in the period. They enjoyed double digit growth in sales and gross profit.
First Half Results: Cigarettes
Gudang Garam (GGRM), the second largest cigarette producer, booked net profit of Rp2.87 trillion in the first half of 2016, an increase of 19% from the same period of 2015. The company’s performance weakened in the second quarter, pretty much in contrast to HM Sampoerna (HMSP), which reported weak first quarter, but significantly stronger second quarter.