DBS Kalbe Farma: Not Rated; Rp2,450; KLBF IJ

Kalbe finalized divestment of packaging division

Yesterday, Kalbe Farma has signed a conditional sales and purchase
agreement to sell a 58.1% stake in PT Kageo Igar Jaya Tbk(IGAR) to PT
Kingsford Holdings for Rp112.86b. Kalbe sold 610.06m IGAR's shares at
Rp185 a piece.

Kalbe has been planning to divest its packaging division since early
this year due to its low profitability. Kalbe wants to focus on their
heart of business (healthcare and pharmaceuticals) and increase the
profitability in that area as healthcare related business operating
margin is around 17% well above packaging operating profit margin of
around 3%.

Under its packaging division, Kalbe directly and indirectly owns 3
packaging companies namely PT Kageo Igar Jaya Tbk, PT Avesta Continental
Pack, and PT Indogravure. As Avesta and Indogravure are subsidiaries of
IGAR, this divestment also divest the other two companies.
KLBF will maintain 5% ownership in IGAR to ensure the continuing
availability of packaging material supplies.