SEKAR LAUT - SKLT

Industry

Government plans to establish 24 sea ports in the next 4 years

The additional seaport will reduce logistic cost and it could add more supply of sea product. Manufacturing industry which is related to sea product has a chance to increase its production and to expand its economic of scale. As a result of these, the price of product may decline and the demand is expected up than previous year. On other hand the fuel price at the early of 2015 is down, the countries of OPEC plan to increase oil supply in the market and it will reduce various costs include logistic cost.

Government commits to protect its ocean from illegal fishing

Government implements such hard regulation to fight against to illegal fishing. The ship which enters the Indonesian ocean without any permission has been destroyed. It will reduce illegal fishing and it will increase income of local fisherman. Indonesia has 284 thousand km2 of territorial sea and 2.9 million exclusive economic zones.

Food and beverage industry

Accordance to BPS the Industry growth is commonly stable; the demand of food and beverage product still has potential to grow as the number of population has been increase. As we know, Indonesia has 248 818 thousand inhabitants in 2013 (source: BPS) and it seems continue to increase in the future. Since 2006 until 2012, the average growth rate of this industry sector is double digit (at current price). The industry still has good opportunity to grow in 2015 as the demand will be stable.

In second quarter of 2014, the food industry increase at 7.36 % up than the same quarter in 2013. And beverage industry was also growing in 6.48 % q to q.

Industry of food and beverage for age group of 0-4 year is promising ?

Accordance to BPS the biggest portion of population in 2013 is at age group of 0-4 year. It is 23,852 thousands population. The second is age group of 22,767 thousands population. The demands of food product of the ages of group are potential to increase in 2014 – 2015.

Fishery Industry: low weekly average consumption per capita

In between 2006 – 2012 the fishery sector has average growth about 21 %, the industry growth is stable in the period. Moreover, the weekly average consumption per capita of fresh fish and shrimp is approximately 0.273 kg and for canned fish and shrimp is about 0.4 kg. There is an opportunity to increase its consumption due to low weekly consumption per capita of them. Particular food technology in food processing could make them more interested for consumer.

On other hand the CAGR of fish capture for fishery advanced slightly, it is only about 3 % in 2006 in to 2012. The fish capture in 2012 is only at 5,481 thousand tons. The development of 24 seaports is expected able to raise fish capture from the sea. Meanwhile the production of aquaculture fishery in 2012 was at 5.769 thousand tons.

PT. Sekar Laut Tbk 

Financial Analysis

Sekar laut is established in 1976 at sidoarjo, it has branch office in Surabaya, at Jalan darmo. The company is a member of sekar Group Company. Its business is producing various food products, the majority of its product is made from sea product. The company produces various food include cracker, condiment, sardines, sauces, etc. The brand is called Finna. The company has been selling its product both at oversea and local for more than a decade.  

Based on its financial statement, sales income from export portion is at 17.5 % of total sales in 2013, it declines than percentage of revenue from export in 2012, which is 18.1 % of total sales.

The local sales in 2013 is still dominated, it is 82.5 % of total sales. The increase of revenue in 2013 is at about 41.2 % up than sales in 2012. For local market the east java is biggest market for its products.

The key driver of its business is merchandise product segment; its contribution to total revenue is 61 % of total revenue (gross) and second is cracker which has sales contribution at 26 % of total revenues. For export, the biggest oversea market is Netherlands; in 2013 the export to Netherlands contributed about 46 % of total export. Other countries are china, oceania, England, korea and etc.

The cash cycle in 2013 is faster than 2012, it was 59 days in 2013, and the cash cycle in 2012 was 73 days. The business is able to generate cash faster although there are eliminated items, return and sales discount. In 2013 the company could improve the profit margin from 1.98 % in to 2.02 %.

Forecasting

40 % of sales growth is taken as assumption in next three years as the government plans to build more sea port in 2015-2019. It could be a momentum for growing faster in next 4 years. The company has already had reputable brand finna in its market. The assumption might be too aggressive but if the demand from the market will advance more the company will be possible to attain high growth rate.

Consequently, the company needs more fund such as bank loan, right issue in the stock market or bond issue in capital market.

On other hand, government has done hard effort to protect the sea from illegal fishing, as the result of this; fish capture may increase higher in the next year.