SKLT 2015

Macroeconomic

In 2015, economic growth in indonesia was slowing down in comparison with growth in 2014. The economic growth in 2015 was below 5 % or it was the lowest growth in the last five years.

 Expert said that the slower growth was caused by lower demand in commodities at china and india. The decline of demand decreased export and it increased exchange rate of rupiah to dollar. It was more expensive to purchase dollar with rupiah.

Therefore the price of manufacture increased, as we know among of manufacture industries need to import goods or raw material for production. The increase of price is charged to consumer. The consumer tends to decrease their spending due to higher price. The manufacture reduced their production.

In September 2015 central bank decreased BI 7 day repo rate to 4.75 % as inflation rate declined in to 3.02 %.

Company analysis

In 2015, the company was able to increase its sales 9.3 % in comparison with sales in 2014. The sales growth in 2015 dropped from 20.17 % in 2014 to 9.3 %. Consumer possibly decreased their spending. The biggest portion of revenue was from goods segment. The company purchased goods from third parties who were possibly players in marine fisheries and marine culture. The goods comprise shrimp, fish and etc.

The company was started from home industry that produced cracker, and then its founder, HS commenced to act as exporter of shrimp and other sea products to over sea. Finna, its branded product was familiar in Netherlands, mostly for cracker product. Its factory is located in Sidoarjo, east java.

The company produced branded products that consist of sauce, chili sauce, food seasoning, cracker and etc. it also produced bread. Its subsidiary, Pangan Lestari is trading shrimp and shrimp feed. 

In 2015, the company increased its total debt from IDR 83 billion to IDR 92 billion. Some part of the debt was used to purchased machinery and software installation. This asset under construction is expected to be finished in 2016.

The company maintained its debt financing ratio at around 24 % and its current ratio at around 1.2. It was possibly done to maintain its net profit margin.

SKLT

Digital currency revolution

Digital currency is being considered by people of whole the world for its new currency in transaction. Smartphone technology made digital currency as a choice in payment of their daily transaction. According to wall street journal the daily usage of digital currency of global in 2014 is USD 50 million a day. It is much smaller that the usage of Visa and master card which are amounting to USD 32 billion a day.

There are over than 2 billions of people at whole world which is called as unbanked people. And the developer of digital currency is set them as their target for digital currency product.

One of famous digital currency product is bit coin. Its system was established by satoshi nakamura three months after the financial crisis in US, in September 2008.  Mr satoshi took the momentum of crisis to launch bit coin.

Despite it could reduce cost of transaction, Bit coin still has flaws, it is vulnerable for money laundering and its price is also unstable.  Its currency iteration could change about more than 10 percent weekly. (source: wsj & internet)

Company analysis

The company exports its product to foreign countries such as US, Japan, Europe and etc. Its premium brand of product was called FINNA. But sales from domestic is still dominated its total income. The company has integrated business in food segment; its subsidiaries, Mitra Boga Sukses Abadi and Abadi Java food are operating in restaurant segment. For distribution, another subsidiary, Pangan Citra rasa Nusantara handle distributes the product across Indonesia. 

Surabaya is apparently a sea industry cluster, it is located near the sea and there are many industries either mass industries or home industries which are processing fish, shrimp, seaweed and etc both from fisheries segment and inland water.

Based on its financial statement revenue from local segment was more than 83 % of total revenue. The remained revenue was from oversea which was at 16 % of total revenue. Based on its products segment, the merchandise good segment was dominated which was 45.5% of total revenue of 2014. The second was cracker with 35.1 % of total revenue.

Based on euromonitor the food canned is expected having high growth in between 2013-2017. Its CAGR projection was more than 15 %. The company may start to increase its food canned or preserved food product to capture the demand in the market.

The sales growth of 2014 was more than 20 % compared to sales in 2013. The growth in 2014 was lower than sales growth in 2013 which was more than 40 %. It had occurred due to slowdown of economic growth in Indonesia. Among the people decreased their expenditure in 2014 due to higher cost of living and higher US dollar value to rupiah. Some company which depends on imported raw material has started to collapse and it has laid off employee.

According to the financial report of 2014, the largest share holder was Omnistar Inv H Ltd which has 26.78 % share. The second was PT Alamiah Sari with 26.16 % share.

Finally, the company is expected experiencing significant growth in next five years due its position as market leader of food of marine manufacturing industry in east java.  

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.