SOBI

The company is owned by Cargill food Indonesia with more than 98 % of total shared. The company is controlled by the parent company which is located in US. The company produces starch and its derivatives such as sweeteners, syrup and starch powder. The head office is located in Pandaan city, east java.

Starch is made from cassava as the main raw material. The corporation has several factories in Java and Sumatra consists of two sweetener factory and 3 starch factories.

The company seems focus in one business segment in generating income. In 2014 there was a slightly increase of sales which rose more than 4.1 % compared to sales in 2013. In 2014 the company was able to maintain its margin at about 20%. Meanwhile, its profit margin slightly rose from 6.4 % in to 7.8%. For operating ratio, cash cycle apparently was stable.

More than 42 % of revenue in 2014 was contributed from sales at oversea. The company supplies its product to more to multinational company in 70 countries. Since it had been acquired by Cargill food Indonesia in 2011, the export is estimated to grow significantly in future.

ESSA

Preface

The public listed companies in Indonesia are only 507 companies; the average growth of number of listed company in the last ten years is only 5.4 % a year. That means many companies in Indonesia considered to do initial public offering due to several reasons. In Indonesia it needs approximately 4-6 weeks for issuance time, meanwhile in peers it only needs average 2 weeks. On other hand the company seems afraid to pay higher tax as the disclosure of its financial information which is required by government. For example, the Wilmar group, a domestic company, despite it is listed in Singapore; it is not listed in Indonesia. 

Bond market is also facing same situation, the government bond is dominated, and its contribution is almost 54 % of total bond in the bond market. Lengthy issuance time of bond increased the cost for issuing corporate bond.  It needs more than two months to do. It is much longer compared to peers such as Singapore, Thailand and Malaysia. Big corporation in Indonesia commonly has subsidiary in abroad which is used as entity to capture fund through bond issuance.

In 7^th October Indonesian government has announced the third economic stimulus to improve economic growth. Government decided to do relaxation of regulation in getting business permits and business license. Government is also giving discount of tariff in electricity and providing financial support for small medium enterprise. Few permits for investor such as use of land will be shortened in its process in getting permits.

The relaxation of regulation and discount of tariff were able to increase currency exchange rate to USD, the currency was under 14,000 / USD. The capital inflow from oversea was attracted to Indonesia again. But it is possible that the capital from foreign will be move out at the end of the year.

Surya Essa Perkasa

Surya esa perkasa has LPG offtake agreement with PERTAMINA since 2006, the company is only transmitting its LPG to Pertamina and its subsidiaries based on the agreement. Liquefied Petroleum Gas generally use as fuel for heating appliance in the kitchen, hotel, shopping center and etc. The company has LPG refinery which is used to change natural gas in to LPG. The company was the second largest LPG producer in Indonesia. The company is also producing condensate and propane.

In 2015 the company planned to build new LPG refinery valued more than IDR 1.9 trillion. In 2014, it also started to build ammonia factory valued USD 830 million to complete its expansion project. The factory is expected to be finished in 2017.

In 2014 the sales declined 5.5 % compared to sales in 2013. The weakened in economic growth may be as the key reason for the decline, energy consumption from corporate segment declined as the decrease in production capacity. Consequently, the net income in 2014 decreased more than 21 % compared to net income in 2013.

LPG segment was as the biggest contribution of total revenue in 2014. It was more than 88 % of total revenue in 2014.

ESSA is owned by Trinugraha Akraya Sejahtera as the largest share holder with 30 %, the second largest share holder is Ramaduta Teltaka.  

In non current asset there was a good will amounted to more than USD 20 million or more than 16 % of total asset in 2014. The company invested USD 31 million to acquire its subsidiary, the investment exceeded its fair value and as the result of that there was an increase in goodwill amounted to USD 23 million.

AKRA

Preface

According to JISDOR (Jakarta interchange spot dollar rate), rupiah’s exchange rate to US in 2 October 2015 was at 14,709 / USD. The weakened rupiah may be occurred due to the capital outflow which is bigger than the capital inflow.

It has been occurred persistently during the year. The Fed was printing money in large amount and they implement the rate at almost zero level. It was called quantitative easing. As a result of that, people at US have been able to get loan with low interest cost compared to others and this money is used to invest in many countries. The money commonly is used to invest asset in capital market.

 Their bank regulation allowed them to borrow money for investing in stock and bonds which tend to use for speculation or short term investment. On other hand price of commodity is still not improved, the export amount was difficult to be increased. China, the biggest market for commodity

As long as the inhabitant is able to buy the basic food with suitable price and people have job with sufficient salary, the politic situation will be save.

They abandoned Gold standard for war

The central bank of US and several European countries started to left gold standard since World War I, in the era of Woodrow Wilson, the US government decided to increase money supply significantly since 1917 until 1919. The federal outlay in 1917 was USD 1,954 million which is much lower than federal outlay in 1919; it was amounting to USD 18,493 million. The France government was borrowing money from US to finance the war.

In gold standard the nation which experiences persistent trade deficit, their gold reserve is pulled a way to cover their deficit. The Gold is used to back up the currencies. Central bankers from countries usually conduct a meeting to settle the imbalance with gold. In 1914 there were more than 44 countries which were in Gold Standard.

Company Analysis

The major part of income of the company in 2014 was contributed by its trading and distributor segment which was more 90 % of its total revenue. In 2014, the sales was higher than sales in 2013. It slightly increased 0.6 % than 2013. The company was chosen as the subsidized petroleum distributor by BPH Migas in 2014 with quota amounted to 650,000 Kl.

Since 2005 government has allowed the private sector to distribute to subsidized petroleum and the company was the first private company which was elected as distributor. The subsidized products are High speed diesel and gasoline Ron 88.

The revenue in petroleum distributor segment is expected to increase in the future as the petro station to population ratio is still low in 2014. They expected to get more quotas and distribute more petroleum product.

The company has also run in basic chemical trading, it is selling  basic chemical which is used as raw material in various industry such solvent, organic and inorganic chemical. The basic chemicals are Hydrocholic achid, Soda Ash Dense, Sodium sulphate and etc.

The company has also operated in non subsidized petroleum distribution; the allocation of subsidy for petroleum was also opening new opportunity for business in petroleum trading for the company.

Integrated industrial estate

In 2014 the company started to establish integrated industrial estate in east java. It combined industrial estate with its logistic at deep seaport and energy solution. The company joined cooperation with Pelindo III to build Java Integrated industrial and port estate in Gresik – east Java. The company has acquired land with total area more than 3000 hectare.

According to its financial statement the clients which have more than 10 % of its total income are PLN and Freeport Indonesia. (source : annual report)

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.  

SURYA CITRA MEDIA

The Fed did not change its Benchmark rate on September 2015

The Fed opted not to change its fed fund rate on September 2015, but they still plan to raise its benchmark interest rate in this year. They decided it due to the unemployment rate in US which is at 5.1 %. The Fed decreased its benchmark rate in to near zero three months after the collapse of big investment bank, Lehman Brother. The lower rate could increase sales in automotive sector and commercial estate. As the result of that the official unemployment rate dropped from 10 % in 2009 in to 5.1 % in august. According to moody’s the key marker of healthy unemployment for US is below 5 % and it is expected in next several months, the unemployment rate will move to below 5 %. The slowdown of economic growth in china is also as the key factor to decide not to change federal fund rate.   

The median projection for rates at the end of 2015, June 2016 and June 2017 is 0.375%, 1.375 % and 2.625 % respectively. The long term projection rate will be at 3.75 %.

For Indonesia and other ASEAN’s country the Federal fund interest rate is having strong influence in their currencies. Currencies may be declined when the investor pull their easy money back because their investment is funded from debt with lower interest rate.  It has been occurred once the Federal Reserve makes announcement about their monetary policy.

Company Analysis

SCTV was no.1 ranking in all the time 5 + demographic

Surya citra media is owned by Elang Mahkota Technology as the largest shareholder with more than 60 % of total share. The company’s key person is Mr. Sutanto Hartono, formerly CEO of Microsoft Indonesia, he hold MBA degree from university of California, USA. He has been supported by Mr Alvin widarta sariaatmadja which is as vice CEO of the company. Mr Alvin may be a relative of CEO of Elang Mahkota Technology, Mr. Eddy Sariaatmadja.

For president commissioner position is filled by Mr. Raden Soeyono, vice president commissioner is Mr. Suryani Zaini and Mr. Glenn M Surya yusuf has been appointed as independent commissioner. Mr. Glenn is also vice president commissioner of CIMB Niaga and non executive director of CIMB group.

Surya citra media has done a merger with indosiar karya Mandiri, the parent company of indosiar visual mandiri in 2013. At recent indosiar is one of company’s subsidiary.

Surya Citra Media has subsidiaries, it consists of Screenplay production, Indosiar Visual Mandiri(indosiar), Bangka television,Surya tri optima multikreasi, Surya Citra Gelora and Surya Citra pesona and also surya citra televisi (SCTV). Screenplay production is run its business in Drama series and television movie production. Meanwhile Surya tri optima multikreasi is shaped from joint venture with trinity optima production, a local artist management. This company operates in artist management and entertainment sector.

In 2014, the sales growth was 9.7 % compared to sales growth in 2015. There was also a slightly improvement in gross margin from about 62 %in to 64 %. The biggest client of the company in 2014 was wira pamungkas pariwara which contributed more than 24 % of total revenue from advertising.

For the program material in 2014, it consisted of 91 % local program, 3.6 % import and 11.7 % in house. According to emtek’s annual report SCTV is no.1 ranking with 17.2 % average audience share in all the time 5 + demographic, meanwhile indosiar achieved 11.9 audience share, it was no. 3 ranking.

In 2014, the company has expanded its business in digital advertising technology and service at Singapore. It acquired 50 % share of whisper media pte ltd.

The company has good liquidity; it has a lot of cash. The company has license of broadcasting of champion league, Europe league and others league. The bank guarantee from Citibank na was amounting to USD 13,4 million. 

Source: annual report SCMA, Annual report EMTK . internet  

CAP : Chandra Asri Petrochemical

Unemployment in Indonesia higher compared to its peers

As a slowdown in economic growth the unemployment in Indonesia rose. The unemployment population in Indonesia is commonly higher than its peers in ASEAN’s country. Indonesian is at 5.9 % of total population in 2014, Malaysia, Singapore and Thailand is 3.1 %, 1.9% and 0.8 %, respectively. The solution of this situation is opening new job vacancy through entrepreneurship.

Based on data from related ministry the entrepreneur rate in Indonesia is only 1.56 % of total population, and it is lower compared to Singapore and Malaysia which have rate of 7 % and 5 %. Based on experts the ideal number of unemployment rate is 2 % of total population, this country is still behind in developing entrepreneurship to create job.

In Indonesia bureaucracy is a bottle neck for entrepreneur in proposing loan, the debtor has to have experience at least 5 years. It is regulated by the central bank of Indonesia. On other hand, there is same condition for investing procedure, especially for foreign investment. For foreigner, there are hundreds of approvals which have to be available for establishing new company in Indonesia. 

Company Analysis

The only naphta cracker producer in domestic

The company is the only naphta cracker producer in Indonesia, this factor may be as the key success factor for this company. The company evolved to expand its production capacity to capture the demand both domestic and foreign. In domestic the company has no competitor and it plans to expand its cracker production in the future.

The company hired key person who has experience in similar industry, and they commonly recruited from international company such as Shell and etc. The company also has partnership in maintenance technology with SCG chemical, a chemical company from Thailand, which is also its share holder. SCG is also supplying naphta to the company. Then the naphta is manufactured to produce naptha cracker, polypropylene, olefin, polyethylene, butadiene and etc which are used as raw material of several industries such food and beverage, automotive and etc.

The company is owned by Barito Pacific as the biggest share holder which has more than 50 %. The second is SCG chemical company which has more than 30 % of total share.

In 2014 the company’s sales declined 1 % compared to sales in 2013. The fluctuation of crude oil price and the naphta cracker product such as polypropylene might inflict the fluctuation in its sales price. There is also the slowdown in economic growth which affected several industries related to its product such as automotive sector. According to annual report there was a slightly decline in its sale volume from 1672 KT in 2013 in to 1649 KT in 2014.

For advancing the supply chain, the company developed several warehouses in places at java in order to accelerate its delivery time. The company is also having supply chain infrastructure such as pipe line for transferring the ethylene directly to the customer in Cilegon and Merak district. In order to support the production process, it built own 53 MW power plant for naptha cracker production.

In 2014 the company added its ownership in Synthetic Rubber Indonesia, its subsidiary which produces synthetic rubber. The company has spent more than USD 8 million to purchase additional share. SRI is its joint venture with Michelin, foreign company from France.

In addition, the company has stopped its crude C4’s export in 2014 in order to create value on its product. The crude C4 recently uses as raw material for its new butadiene extraction plant. 

On other hand, the fluctuation of exchanger currency rupiah to USD could be a serious threat for the company. If the oil price increased the company would face the increase of raw material cost, interest expense and operating expense. It is necessary to build additional tank storage of crude oil deposit to anticipate the increase of oil price. The company’s revenue in 2014 was dominated from domestic sector which was more than 77 % of total revenue.

PWON - Pakuwon Jati

Anxiety of crisis in 2015

In 1997 the economic crisis started from Thailand and Malaysia, its currency exchange rate was slump to US dollar. Then the crisis spread to other countries includes Indonesia. The speculators used that momentum to attack the foreign reserves of the ASEAN’s country to get gain in money market. Indonesia and Philippines needed more time to recover from economic crisis. They took more than three years to fix their economic condition.

At the past, Indonesia got loan from IMF which was disbursed 3 times in two years. At the last aid, Indonesia considered to the 50 point of understanding of proposal from IMF. The points were apparently not matching with circumstances of Indonesian economic condition. IMF did the same treatment for economic recovery package of Indonesia with other countries such as South Korea and Mexico in 1995 and 1997 respectively.

  In 2015, the crisis may be started from Malaysia; it was begin from the wall street journal which was posted an article about the conjecture of corruption by the prime ministry through 1^st MDG foundation. He was reported receive fund amounting to about USD 700 million through the foundation. The case has deteriorated the stability of politic condition in Malaysia. The opposite party started to do massive demonstration in its capital to ask the prime ministry to resign.

The momentum had apparently been used by the speculator to attack the Ringgit due to the economic and politic issue in the country. Ringgit was experienced the worst decline in August among of ASEAN’s currencies.

The current issue in Indonesia is the case of the dwelling time in the sea port especially for Priok. The case may relate with the previous regime, there was a friction between government official who has different interest in the sea port.  

NPL attained highest level since 2011, construction is the worst

Non Performing loan of banking industry in Indonesia reached highest level since November 2011. The allowance of bad loans soared due to its increase. The highest increase of bad debt provision cost was CIMB Niaga.  The average increase of bad debt expense was 57 % year on year. Latest data from OJK and the central bank said that the NPL ratio of banking industry in April 2015 was at 2.48 %.

The highest NPL rate was in Construction sector which reached 5.5 %. The second was socio cultural, community, entertainment, other individual services sector which was at 3.78 %, followed by transportation and warehousing with 3.53%.

Market is irrational in Short Term ?

Although the macro indicator showed particular data either positive or negative, the market is irrational in the short term as Soros’ opinion and theory. The investor in money market tends to decide for investing based on what the majority people do in the market and based on issue and information in media.

Druckenmiller, the son of Soros, was doing mistake in predicting US dollar currency movement. He bet the US dollar falls, a decision was taken based on macro indicator, the increase of current account deficit which indicates that the import side exceeds export side.

Economic stimulus: 12 policies for banking sector  

OJK planned to conduct policies for economic stimulus; it consisted of stimulus for banking, Capital market, non bank financial institution and Education and consumer protection. For banking sector, OJK would like to implement 12 policies related with credit risk and credit quality in encouraging the loan growth in Indonesia.

Company Analysis: Asset rose by Acquisition

Based on annual report In 2014 there was a significant increase of asset, it rose 80.4 percent up compared to asset in 2013. The increase of asset was reached from acquisition of Pakuwon Permai, Centrum Utama Permai and others. The company acquired PP with cost more than IDR 2.34 trillion. The fund was attained from bonds amounting to more than USD 200 million. Another acquisition was Centraum Utama Prima, the company increased its share from 45 % in to 70 %. It set as controller position with more than 50 % ownership.

The significant increase in asset was property investment part, it rose from about 3 trillion rupiah in to 8 trillion rupiah.

In 2014 the sales increased 27.8 percent compared to sales in 2013. The company used equity method in acquisition either PP or CUP that is why the sales did not increase significantly. The company also got gain in purchasing companies with discount price.

The gross margin in 2014 was about 60 % in spite of there has been a slowdown in economic growth. According to audited financial statement, the land yet not developed in 2014 was at 1,461,183,232 thousand rupiah, it increased from previous position which was at 438,535,058 thousand rupiah. Its biggest portion was at south Jakarta. Meanwhile, there was also significant increase in its net income in 2014 compared to net income in 2013. It was more than double or above 128 % up due to acquisition as the above explanation.

Real estate was the key driver in 2014 with largest contribution at more than 50 % of total sales. In spite of there was a plan to change tax regulation for property the company seem still able to show good performance in 2014.

Source: Mandiri institute: Economic review , Annual report 2014