Rising Bakery Consumption
The industry outlook for the bakery industry is very positive, mainly due to rising consumer income, which means rising consumer affordability resulting in more people upgrading their lifestyle. Change in consumer lifestyle could results in bread consumption to increase in the future, as bread is seen as an efficient and healthy food products to consume, which could also substitute for rice. According to Susenas
data, white bread consumption in 2005 was 460 million packs. This number has risen by 61% for the next three years to 742 million packs. In addition, wheat product consumption in Indonesia also increasing each year— bakery industry contributes to 25% of overall Indonesian wheat consumption, and at ± 18kg per capita according to GAIN report, consumption is still relatively low compared to the world’s consumption.
Rapid Expansion—Building Presence In More Areas
At the moment, the company is only serving Java, Bali, and Lampung area. In order to take advantage of the industry prospect and economic growth, the company has plans to
build new factories in area such as Medan, Palembang, Semarang, Kalimantan, and West Java over the next few years to increase production capacity and widen the products’
penetration area. Upon completion, the company will be able to appeal and reach a broader segment across Indonesia and extend its distribution network, which means higher revenue and profitability in the years to come. The company has aimed to build two new factories in Semarang and Medan to start producing at the beginning of 2011.
Strong Fundamental Background
The company has a solid fundamental, and has been growing strongly in the past. Revenue has grown by 35.8% CAGR since 2005, and net profit has grown by 75.6% CAGR. The company is on track to continue its rise as it has a well known brand—which arises from the constant quality of the products produced by the company, excellent technology in terms of developing products—due to its relationship with Shikishima Baking Japan, wide distribution network—the company can distribute up to a radius of 200 km from its factory, and an experienced senior management team.
Initiating Coverage with TP at Rp 1,800
Based on DCF valuation, with WACC of 11.5%, and terminal growth rate of 7%, we have derived a target price of Rp 1,800 for ROTI. Based on current price, ROTI is trading on P/E 19.6x based on 2010E net profit, and P/B 4.2x based on 2010 estimated. We note that the company has bright prospect, high growth potential, and solid fundamental. At the current price of Rp 1,690, it is trading at a discount.
Tidak ada komentar:
Posting Komentar