ICBP

Economic growth of Indonesia in 2012 is at 6.5 % higher than 2011. In 2013, the government projected the economic growth at 6.4 %. Despite rupiah currency decline to US dollars, Government still believes that this country has strong fundamental of macroeconomic. GDP is dominated by local consumption of more than 240 million people. And that will make several industry such as food, beverage and tobacco is still growing by demand from inhabitant of this country. Since 2006 until 2010, this sector has been growing with average growth at 21 %.

i think government must take action to face decline in rupiah exchange rate to US dollar. For example, rupee of India which has same problem, the government of India plan to increase their government spending for infrastructure projects in order to save their economic.

Indonesia's government actually has done several actions in facing the currency problem; they did swap agreement with South Korea and China amounting to US 40 billion to make rupiah stronger. They also increase government spending for developing and opening sixty thousands jobs for younger age (50% of total population) in its departments and local governments at entire nations. It will make domestic consumption stable. With those actions, i think it is still difficult to reach 6.4 % growth as the target; they have to increase BI rate again, do tight money policy and investing more money for Infrastructure projects. Those are just my opinion. 

ICBP ( Indofood Consumer Branded Product Sukes Makmur, Tbk )

Indofood CBP (Consumer Branded Product) sukses makmur Tbk is established as a separate entity in September 2009 and it did initial public offering in Jakarta Stock Exchange in 2010.  The company is a part of group of indofood which have various business segments in food, beverage and palm oil from downstream to upstream. This entity operates in packaged food and packaged beverage for all age.

The products of ICBP have five segments: noodles, Dairy, Food Seasoning, Snack Food and nutrition and special food.   

The 3 biggest segments in contribution of revenue of each are 69 % for noodles; 18 % for dairy and 6% for Snack Food. 

For instant noodle, compared to Thailand, Singapore and Japan, Indonesia has bigger market size and it is still growing. Since 1999 until to 2009, the instant noodle increase 40 % larger, from US 2,221 million up in to US 3,191.4 million. i projected the market size will increase at US 3,600 million in 2013, that means instant noodle is still having good opportunity to grow.

The instant noodle products of ICBP are supermi, indomie and sarimie. The strongest competitor for instant noodle is Wing Food with its Mie Sedap. Based on the data above the number of player in instant noodle is increase from 2001 at 57 players become 84 players in 2005.

ICBP need more innovation to create new product and defend its market share, especially in instant noodle market size. I think the company has to do more in anticipating price of its essential commodities, wheat. for example in this recent condition, the commodities rises in its price because of the weaken currency of rupiah to US, the company must pay more to buy material for its production. Although the export has been doing for several years but i think it is not significant in number. 

in spite of the ICBP is supported by its affiliate, the biggest wheat flour mills in the world, Bogasari, The company still need to innovate in others product which use more local commodities such as rice, cassava, potato or others commodities from the sea. Or it does acquisition of plantation in Europe to produce wheat. Diversification or vertical integration, two options which is good for the future.   

For snack food segment, the sales contribution tends to increase from 2009 until 2012. it need more concern and investment in promotion and research to increase revenue.

For Dairy food, its sales contribution is stable, at 18 - 19 percent. People in indonesia preferred to consumes instant noodle because of cheaper price to alternate rice which is more expensive. 

I conclude that ICBP need more investment to enlarge their market size, especially in non noodle product such as dairy food, beverage or others. There are a lot of cash and cash equivalent in 2010 until 2012. ICBP has just done its IPO in 2010, the company may still wait for good momentum to invest. with its liquidity the company could invest new factory or acquire existing brand from another competitor or doing vertical integration, such as buying another distributor company or buying packaging / plastic producer. I don't know its management plan for its future. If the company will late in taking action, the competitor will take chance to expand, I remember when wings food expand its food division with mie sedap.  ICPB produce mie sedaaap to face wings food. 

The investor need to analyze its activity ratio, profitability ratio  and others financial ratio to ensure that the company will be more profitable at the next three years. Transaction with relate parties is needed more concern. 

The company have several creditors, those consist of Bank Mandiri (working capital loan and overdraft loan), ANZ (Trust Receipt for import ), BCA (MML and working capital loan).

In 2009 - 2012, cash and cash equivalent increases from 695.8 to 5,484.3 meanwhile net cash flow from investment activities increases from 307.6 to 1492. The net fixed asset also increases from 2180.4 to 3,839.8

The net sales in 2012 increase 11 % higher than net sales in 2011. Net income of 2012 is higher than 2011, it grows 10.4 %.

I make estimate the company will grow 10 %higher in 2013 based on average growth at the past four year if there is no merger and acquisition in recent year.   

Link and news :

Indofood CBP acquires Club for Rp 2.2 trillion

http://www.thejakartapost.com/news/2013/11/16/indofood-cbp-acquires-club-rp-22-trillion.html

The PCIB Acquisition completed

http://www.indofoodcbp.com/corporate/InvestorRelations/PressReleases/tabid/130/articleType/ArticleView/articleId/84/language/en-US/THE-PCIB-ACQUISITION-COMPLETED.aspx

Board of directors

http://www.indofoodcbp.com/corporate/en-us/ourcompany/management/boardofdirectors.aspx
 

SOLAR CITY

Solar City : Green Energy Start Up with steady COST of energy

How is the best way to make analysis for start up?. Green energy industry is a new concept in mass industry. In 2008 Barrack Obama in his campaign announce his 5 million green jobs program. The program is consisted of several research in renewable energy, Fossil fuel, Electricity infrastructure and also low emission energy research. All of those programs are conducted for supporting green energy industry.

By 2015, based on solar trend, the industry is predicted growing 38 % based on my forecasting with average point to point estimate from 2000 - 2012. I think solar energy will grow fast because oil price is complicated and having too much leverage to global economy. 

we can remember oil price change when Libyan people was agitated by facebook and what was happen to oil price when Egypt was disorder because of its political issue.

This kind of industry will change everything, at the future people may prefer to live at tropical country because its energy cost is cheaper and the weather is comfortable.

Gas Vs Solar Energy

Gas will rise its price when the demand is more than its supply. The supply can be arranged by big oil companies as the major player and it will not be steady in its price. Meanwhile solar energy depends on the local weather and global climate. It is difficult to be controlled by human or market player. This is steadier.

In the past eight years, installed solar capacity is exceed 1500 %, from less than 1 Giga watts to more than 15 Giga watts.

I think Solar city was exist based on same vision with government campaign in create green energy to make thousands jobs opportunity. Co Founder of solar city is Lyndon R Rive. Solar city offers product and service which relates with solar energy. They said that in every five minute they get new customer.

Lyndon set the business in to product and service. The products are solar panel and inverter with some kind of software and tool which helps clients to monitor their energy consumption, such kind of energy evaluation which could be seen loss and efficiency in its useful of energy.  They did Campaign that their product is able to reduce energy cost until USD 50 each months compared to conventional energy. They also provide service and monitoring for existing customer in order to make money in customer engagement. The company also provide energy storage product for customer.  

They also create electric vehicle charging station for serving electric vehicle, they have corporation with tesla in this project. Elon Musk, CEO of Tesla is also hired as Chairman in Solar City.

Customer could buy either with energy purchase agreement or solar energy lease. Both of those are paid in monthly payment. The lease contract is at long term payment, 20 year lease.

US states commonly has 4 seasons with unsteady weather, the use of solar energy can be optimum at dry, summer and autumn.      

Customer

Residential : The homeowners who are spread on California and Maryland are included in this kind of customer.

Government: US air force base; School district

Commercial:  Walmart; City of Lancaster; home depot etc

Future Project

The company announces  its plan of  project financing amounting to USD 1 billion for military housing from Bank of America Merrill Lynch.

I made its sales forecasting based on Global data at above with 40 % growth. This start up company has been loss in these several years. But it has huge cash amount, that means the investor still believed to this business model. They trust to the company, they think at the future the company will keep growing and will be more profitable. 

  

COWELL DEVELOPMENT TBK - COWL

Macro economy

Gross domestic product of Indonesia increase 6.5 % in 2012 compared to 2011. it means that indonesia has good economic environment for investment. Despite the IDR currency rate continue to drop to US dollar currency rate, and BI rate rises in recent year, several industries still have good future to invest, include in real estate.

Real estate industry has steady growth; in 2006 - 2010 the industry increases in the range 10% - 19% with average growth at 14.32 %.

Instead of indonesia Central Bank has implemented new regulation about Loan To Value which arranges the collateral value in mortgage at 70 % (Bank Indonesia Circular No. 14/10/DPNP, dated 15th March 2012), mortgage still increases in first quarter of 2013 at 47 % compared to the same period in 2011. In 2010 real estate industry to total GDP is only 2.4 %, this is lower than others country in south east asia such as malaysia and thailand.   

 For residential, jakarta has strong demand for luxury apartment which is driven by corporate leasing and inbound business trips from oversea. Apartment rent is projected to grow in the range 15%-16% in 2013, based on jones lang lasalle.  

The real estate sector industry is still promising in 2013.

Real estate industry

Real estate to GDP (%)

Cowell Development Tbk (listed in Jakarta Stock Exchange)

Forecasting

Based on sales the last 5 years I conclude that the sales will increase 38.85 %, I used formula growth = (sales of 2012 / sales of 2008)^0.25 - 1

The revenue will be affected by inflation rate and interest rate. Real estate price in indonesia is growing faster, the apartment price in jakarta increase 43 % in 2012 compared to 2011. Demand for real estate is still higher than its supply, mostly in strategic and favorite position.  The interest rate which is rising and the Loan To Value policy which is more conservative will make real estate industry grows slower. 

Project

The company has several real estate projects, but the key driver of its high growth is westmark apartment at CBD , West Jakarta which has 71 % contribution of total revenue. Others project are Melati Mass Resident and Serpong park residence. The company expanded to Borneo island for its new project, it is named as Borneo Paradiso.

Benchmarking  (2012)

	Cowell	Alam Sutra	Ciputra
Revenue	100.0%	100.0%	100.0%
Gross Margin	45.4%	50.2%	60.0%
Interest Expense	2.4%	21.4%	5.7%
Net Income	22.4%	25.6%	49.7%

From the table at above I conclude that cowell will still be growing and it needs more improvement. Its gross margin is lower than other competitors and it is same with its net income. its interest expense is lower than others , in 2012 the company has just done acquisition of subsidiary. The company may have low leverage cause have allocated more equity in its capital structure.

Economic Growth Of Indonesia

I made the forecasting at below based on moving average time series analysis. The data was taken from Trade ministry Department. According to my calculation Gross domestic product will rise slightly 1,7 % (with adjustment) and 4,6 % (without adjustment). Government has made target 6 % for economic growth.

Slower economic growth goal is made because of the global economic condition. The Fed plan to reduce debt and money supply. The treasury secretary said that possibility of economic growth in 2013 is below 6%.

Forecast : Time Series VS Exponential smoothing 

with exponential smoothing i find bigger  MAD, MSE and MAPE than Time series. So I think we better use time series. If you want better result you should calculate with more data for input. 

Manufacturing Industry as the biggest portion of GDP in indonesia

Manufacturing Industry in 2006 - 2010 

Manufacturing Industry to GDP in 2006 -2010 

Unilever Indonesia Tbk

Sales Forecasting with Moving Average Time series analysis (in Billion IDR) 2008 2009 2010 2011 2012 2013 Q1 3,787.2 4,482.3 4,972.9 5,668.3 6,604.1 5,387.9 Q2 3,832.9 4,473.4 4,949.7 5,795.8 6,755.5 6,582.0 Q3 4,135.3 4,556.9 4,762.4 5,858.0 6,984.5 8,961.5 Q4 3,822.3 4,734.2 5,005.3 6,147.0 6,959.2 8,447.9 Total 27,303.2 29,379.3 Growth  7,6%

Based on the table at above, sales projection of 2013 increase 7,6 %. I used simple combination of moving average and time series, then use its factor to adjust the forecast in four quarters. 

Forecasting with seasonality 

with another method, I conclude that the growth rate will be at 15 % up.  I used seasonality method to estimate the sales of 2013. 

I think the advancement in sales is occurred because of inflation rate factor and increase in sales. It is need deeper in analysis at sales in number.  Is there any increase in number ? which product are dominant in sales contribution ?. commonly consumer goods are inelastic in its demand to price. 

Rise of oil and gas price which is moved by the worse politic condition in Middle East make the global economy slow downs. The energy cost, production cost and transportation cost is more expensive. 

Meanwhile the Fed plans to decrease its money supply as the economic start to recover in USA. The Indonesian rupiah will be weaken to US dollar. In recent times the US government has shut down its activities because they have to negotiate with parliament about Government Debt. Government plan to increase its debt but unfortunately parliament disagree with that plan. 

Meanwhile based on data from trade ministry, Indonesia's export is decrease in 2011 - 2012. It declines 5 % down.

estimation for next year in private consumption will be decline because people will spend more money for transportation cost, energy cost and also the multiplier effect of cost of energy. The price of goods will increase as the increase in production cost.

According to the forecasting above I have made its financial projection

In 2013 -2015, i estimate the company will be able to increase their sales 15 % up in each year. I use seasonality method with 15% growth. 

Big company usually grow stronger with M&A strategy or buy the existing brand in order to advance growth. Unilever has done several corporate action such as buy local brand like sari wangi, buavita etc.

I think the analyst have to find the product which has stronger impact in sales increase then it must be figure out its price sensitivity. Will the change in its price effect demand from customer ?

ANALYSIS OF TESLA

Back Ground

Co-Founder and key success factor

I do not doubt that the key driver of Tesla is at a one man show of the CEO and Co-Founder ,  Elon Musk.  Elon manages the innovation of the tech company in set up its Goal setting.  Elon has successful story in his former company Pay Pal, he was the co founder of Pay Pal.Elon is also involved in space x. Company which is concerning in advancement of rocket Tech.

Elon interest are in space, clean energy and internet. He thought himself with computer programming when he was a child.

Elon is also supporting his cousin clean energy business at Solar City. Solar City is the biggest solar energy project in USA. Elon collaborates with solar city to support battery equipment for Tesla's Vehicle. I think elon should move to Germany, the nation with biggest solar energy production.  

Business Model

The company applies an integrated innovation in material science, internet and clean energy.

The company produces electric power train system for major player in vehicle maker such as Toyota, BMW, Mercedez Benz and Daimler. The company provides all spare parts and builds supercharger network for charging at several cities, provide retail and service center. The business model could engage the customer. The company is also providing resale value guarantee for the customer to boost revenue with such financing program.   

The electric car which has been produced is Tesla Roadster. The available models of roadster are model x and model s. The car is built for premium segment because it is an electric sport car.

Recent Condition

Tesla begins to produce vehicle for major player company. I think Elon do different strategy in order to reduce competition with major player such as Toyota or BMW. In 2013, Elon plans to produce 40,000 vehicles, a sport sedan model for BMW. He decided to make partnership with BMW.

The company starts to expand in Europe to sell the vehicle.

Key Financial term

The company experiences losses in several consecutive years since 2008 until 2012. This is a common condition for start up company. The cash flow from operation and cash flow for investing are negative. The company gets the fund from common stock and Long term debt for financing the business.

The revenue in 2012 increase 159 % up compared to 2011. But i think the company has to check its aging receivable and collecting the money ASAP if there is overdue payment. The investor also has to check the sales contract because the inventory in 2012 increases 436 % up than the previous year but i think this is all right because it is financed by 440 % of increase of account payable in 2012 compared to 2011, an indicator of vehicle piled up in its warehouse.  

The type of operational management usually has big impact in cash to cash cycle. In operating lease concept, the company records the vehicle at the balance sheet. The net operating lease in 2012 is drop 14 % compared to 2011. This means the car order may drop or there were many resale cars from customer.

The company faces higher competition in high quality sport electric car segment, it is indicated with the decline of profit margin since 2010 until 2012: 21,79 %, 19,80 % and 13 %. I think at the next year the profit margin will be lower because they start act as vehicle manufacturer for another company based in three years trend. BMW is doing its branding strategy in sport electric car, they buy car from another manufacturer then sell it with BMW as its Logo.

The company spend 6.89 % of its revenue for Research and development cost. This was lower than the same cost in 2011 which is at 9 % of its sales. It seems the company start to reduce cost to increase profit.

Outlook

Sport electric car may compete with natural gas car. Tesla needs more capital to provide supercharger network for the customer. Natural Gas increases in its production level, mostly in US. in order to continue growth i think the company need to produce hybrid car.  

 Resale Value guarantee may be hooks the company at the future. It represents that it doesn't confidence in electric sport car.

The Revenue will increase at the end of 2013 compared to the same period in 2012. The inventory increases sharply almost fifth times bigger but it has been balanced with 5 times bigger on its account payable and the company also has high cash level, 18 % of its total asset in 2012. It means supplier believe that Tesla will sell more and i will invest more in supercharger network and service center. The working capital is negative means that the company does new strategy in run the business. There are a certain contract between supplier, Tesla and the corporate buyer.

	Asset	Sales
2008	51,699.0	14,742.0
2009	130,424.0	111,943.0
2010	386,082.0	97,078.0
2011	713,448.0	148,568.0
2012	1,114,190.0	385,699.0
2013	1,800,000.0	537,593.1

I have made projection of  the revenue with excel tools, i figured out that the asset increases double every year and it has strong correlation with sales. i estimate that sales will increase 40 % in 2013 compared to 2012.

APPLE

My analysis

In 2012 major increase of revenue is contributed by sales in Japan.  It was 93 % higher than sales in the 2011 at Japan. But the most biggest revenue is still at USA. Total increase of Global sales in 2012 is 45 % up compared to revenue in 2011. The most wanted product was IPHONE which is at 71 % increase in 2012 compared to 2011.

The key driver of Growth of this company is IPHONE in 2012. Innovation in IPHONE is absolutely fantastic and make the product is very welcome in the market.  

Innovation in IPHONE is a result from steady research and development cost which is allocated every year. The company has consecutive R&D cost 4.5 %, 3.8% and 3.8% in 2010 - 2012. The new IPHONE product   may be achievement of higher cost in 2010: 4.5 % of total net sales in that year.

In 2013, i think apple will be at lower performance. Leadership skill from steve jobs is still having high leverage in the company. Apple has to find someone who knows the things which can make people say "woow" at electronic device.  Steve knew those formulas and he had right direction in making innovation, the innovation for growth which can attract people to allocate money for buying.

I use worst case scenario for apple in forecast 2013 - 2020. Economic environment at USA is also still questionable. The system is failed; soros said that in some conversation with some TV Station. Soros compared USA with United of Soviet, failure is caused by failure in system. i am using 10 % for revenue growth and 44 % for gross margin during ten years.

I used Net Operating Cash Flow for Valuation because net income is accounting adjustment for determining the profit.

I think apple need to move to another country which has steady politics and good economics.