December 28, 2010

COMPANY COMMENTARY
INDONESIA Equity
Consumer Goods

Mayora Indah (MYOR)

Report Origin: Company Update BUY Volatility Risk : LOW
12-Month Price Target : Rp 14.350,-

POTENTIAL CONTINUING PERFORMANCE

Investment Highlights: Current Price : Rp 10850/shr
52 Wk high (11/08/10) : Rp 13350/shr
„ Satisfying 9M10 Sales and Bottom Line 52 Wk low (02/08/10) : Rp 3450/shr
Achievement YTD %-change : 141.11%
Share Outstanding : 766.584 mio shrs
„ Maintaining Strong Profit & Loss (P&L) and Market capitalization : Rp 8317.44 bio
Floating rate : 67.07%
Healthy Balance Sheet 1 year total return : 157.16%
„ Declining Sales and General Administrative
(S&GA) Cost Potentially Benefits MYOR's JCI - MYOR
Operating Income 3800
13000

„ Enjoying Second Position Among The Players

3600
11000
3400

9000
3200 JCI
„ Increasing Raw Materials Potentially Bal- 3000 7000
Index

anced With Cost Efficiency 2800

5000
MYOR
IJ
2600
Equity
3000
2400

2200 1000
Jan-10

Feb-10

ar-10

ay-10

Jul-10

Oct-10

Dec-10
Sep-10
Apr-10

Aug-10
M

PT. Mayora Indah

Key Financial Measures

2007 2008 2009F 2010F 2011F 2012F

Sales (IDR bn) 2,828.44 3,907.67 4,777.18 5,977.53 7,632.07 9,617.98

Gross Profit (IDR bn) 628.56 753.92 1,133.79 1,183.16 1,434.33 1,759.46
Operating Profit (IDR bn) 238.71 345.42 613.19 625.74 834.53 1,113.05
Net Profit (IDR bn) 141.59 196.23 372.16 421.60 573.89 784.59
EPS (IDR) 184.84 256.18 485.85 550.39 749.20 1,024.27
EPS Growth (%) 51.30 38.60 89.65 13.29 36.12 36.71
Total Equity (IDR bn) 1,081.79 1,245.11 1,581.75 1,806.24 2,223.28 2,690.74
Net Debt (IDR bn) 264.65 671.14 626.46 723.16 647.00 464.01
Total Assets (IDR bn) 1,893.17 2,922.99 3,246.49 3,655.03 4,275.82 5,111.56
Book Value/share (IDR) 1,412.26 1,625.47 2,064.95 2,358.02 2,902.46 3,512.72
PER (x) 58.16 41.96 22.13 19.53 14.35 10.50
PBV (x) 7.61 6.61 5.21 4.56 3.70 3.06
PEG (x) 1.13 1.09 0.25 1.47 0.40 0.29
Operating Margin (%) 8.44% 8.84% 12.84% 10.47% 10.93% 11.57%
Net Margin (%) 5.01% 5.02% 7.79% 7.05% 7.52% 8.16%
ROE (%) 7.48% 6.71% 11.46% 11.53% 13.42% 15.35%
ROA (%) 7.48% 6.71% 11.46% 11.53% 13.42% 15.35%
Net Debt / Equity (x) 0.24 0.54 0.40 0.40 0.29 0.17

Analyst : Akhmad Nurcahyadi

Email : [email protected]
Phone : (62-21) 25543946 (Hunting)
Fax : (62-21) 57935831
Mayora Indah - December 28, 2010

Satisfying 9M10 Sales and In line with our expectations, MYOR as one of the biggest consumer goods players
Bottom Line Achievement with strong products existence in the domestic industry posted a satisfying 9M10
performance. Company's total consolidated sales grew by 43.69% YoY to IDR 5.12tn
compared to the same period last year of IDR 3.56tn. As a result of stronger de-
mand in the 3Q period, the company also noted a significant QoQ growth from IDR
3.31tn or equal to an increased of 54.67%.
In 9M10 period, food processing, as one of MYOR's main revenue engine recorded
a total of IDR 2.51tn, equal to 47.68% out of its total sales. In terms of 9M10
achievements to full year forecast, the consolidated sales was around 85.71%
compared to our estimate of IDR 5.12tn in FY10F, or increased by 11.08% com-
pared to last year 9M09 result of around 74.63% to IDR 4.77tn in FY09.
Supported with its two strong brand equity products namely Beng beng and Kopiko,
MYOR's bottom line also demonstrated a consistent growth. Company's 9M10 net
profit climbed to IDR 322.17bn versus IDR 267.56bn in the same period of last year,
or grew by 20.41% YoY. In terms of QoQ result, the company booked an increased
of 20.41% from IDR 211.46bn (6M10). In the same period, MYOR's bottom line had
reached 76.42% of our projection of IDR 421.60bn (FY10F) or an increased of
4.52% YoY compared to 9M09 period achievement of IDR 267.56bn compared to its
results of IDR 372.16bn in FY09.
Maintaining Strong P&L On the back of continuing business expansion, successful brand building and rapid
and Healthy Balance Sheet promotion to strengthening products existences in the competition, MYOR's top
line notes a CAGR of 29.36% in the past five years. Its continuous efficiency and
consistent COGS that has been managed in the range of 75% - 80% to its total
sales despite fluctuating raw materials had brought its operating income to re-
main growing and recorded CAGR of 60.01% (FY05-FY09).

Its thriving effort to maintain other income (expenses) in the range of 1%-2%
(percentage of sales) had also given significant benefit to company's bottom line
growth. In the same period, company's net profit posted CAGR of 68.90%. With
continuing effort to enrich company's portfolio product, helped by company's strong
brand equity through its famous slogan of "One More From Mayor" (a well known
slogan for the past years of "Satu Lagi Dari Mayora") should help MYOR to con-
tinue recording strong revenue and noting healthy balance sheet results in the
next years.
Declining S&GA Cost In the past years, KLBF has been able to maintain its S&GA expenses in the range
Potentially Benefits MYORs of 15% - 18%. With a strong concern to lowering operational cost and post the
Operating Income implementation of company's efficiency, the ratio successfully decreased by almost
half to 13.78% (FY07) versus 17.04% (FY06) and reached its lowest to amounting
10.45% by the end of 2008.
Last year MYOR maintained its S&GA ratio at the same level or recorded around
10.90%. With its consistent attempt to control the ratio, it should give significant
impact to company's bottom line, especially its operating income. The continuing
declining ratio should also become a potential balancing factor for MYOR's P&L to
maintain its net profit growth especially to control the fluctuation of raw material
prices.

2
Mayora Indah - December 28, 2010

Declining S&GA... S&GA To Sales Ratio

18% 17.04% 550
16.61%
520.60
500
16%
13.78% 450
14%
408.50 400
12% 10.90%
389.85 10.45% 350

IDR Billion
10% 336.03 300

%
8% 283.41 250

200
6%
150
4%
100
2%
50

0% -
2005 2006 2007 2008 2009

Source : Respective Companies

Enjoying Second Position Data issued by Euromonitor International confirmed that the domestic biscuit
Among The Players market recorded significant growth in the past years. Both the retail volume (tones)
and sales value (IDR) have been increasing in domestic market. As of the end of
last year, the biscuits retail value posted a growth of 8% reached to around IDR
9tn, while the volume grew by 4% YoY.
The data also revealed that plain biscuits and chocolate coated biscuits experienc-
ing the highest value of growth around 9% YoY. In the future year, we continue
to maintain our confidence outlook and projected that the total biscuits retail
sales value (FY11F) are likely continue to post a growth close to double digit. With
MYOR's consistent business expansion and cost efficiency, we also view that by
the end of 2011 MYOR should be able to manage its second position within the
competition and continue to enjoy a significant increase of market share.

In terms of market share, Nabisco continue to leading the competition with around
18.9% of market share, while MYOR following Nabisco which MYOR noted around
16.8% in the second position. Khong Guan Indonesia, as another well known
biscuits manufacturers stood at the third position with around 14.8% market
share. The remaining 49.5% market share are enjoyed by Ultra Prima (11.2%),
Arnott's Indonesia (6.6%), Garudafood Group (5.5%), General Food Industries
(4%) and others with a total market share of 22.3% respectively.

3
Mayora Indah - December 28, 2010

Increasing Raw Materials Despite the fact that MYOR potentially to note significant revenue growth, the
Potentially Balanced With fluctuation of raw materials should become a potential threat for MYOR's margin
Cost Efficiency growth in the future. In the past two years, raw materials composition amounting
around 83%-85% of the total cost of good sold, while the remaining 15% were
direct labor and factory overhead. Hence, any increasing raw materials is poten-
tially to squeeze MYOR's operating revenue growth.
Nevertheless, we believe that the cost efficiency implemented by the company
and MYOR's ability to maintain its COGS to Sales ratio level in the range of 70% -
80% as well as company's continuing volume growth should become a balancing
factor to the potential declining of MYOR's margin. We also view that the continu-
ing increasing demand on the back of stronger brand equity and product portfolio
become another key success factors that should help the company to maintain its
growth above the previous years level.
9,000 Top Line Growth Versus COGS To Sales -71%

FY04 - FY11F
8,000 7,632.07 -72%

7,000
-74%

-74.29% 5,977.53
6,000
-75.15% -75%

IDR Billion
5,000 -76.27%
%

-77%
3,907.67
4,000
-77.91% -77.78%
-78%
3,000
4,777.18
1,971.51 -80%
2,000 1,706.18 -80.21%
1,378.13
2,828.44 -80.71%
1,000 -81%
-81.21%

- -83%
2004 2005 2006 2007 2008 2009 2010F 2011F

Source : Respective Companies

Valuation and Recommen- Consumer goods sector is considered as an immune industry to the weakening
dation economic condition. Thus, we still give our positive outlook to the potential growth
of MYOR's biscuits business in the future year. Its strong brand equity and solid
distribution network should also become other positive variables that could help
the overall MYOR's business to continue recording a significant revenue growth.
The consistency to implement cost efficiency and continuing business expansion
as well as diversifying company's product to enrich its portfolio, in our view, should
also become another strong positive sentiment that could push the company to
have a sustainable growth. With such strong profitability growth and healthy
balance sheet as well as a bottom line CAGR of around 68.90% (FY05-FY09), should
also become a strong indicator for the potential future growth.
We forecasted that MYOR's top line could potentially reached to IDR 5.97tn (FY10F)
with an increased bottom line of around 13.29% YoY to IDR 429.80bn by the end
of this year. Using the same valuation method of DCF and terminal value (TV)
growth of 5% or lower compared to the industry (consumer goods) average of
5.12%, our estimation suggest us to quote MYOR's fair value of around IDR 15.750
per share. Yet, we had added a discount factor of around 10% for stocks liquidity
and others indeterminate factors, which is impacted to a lower target price. We
maintain our BUY recommendation and upgrade our target price to IDR 14.350
per share, or a potential increase of 32.25% from its closing price of IDR 10.850, as
of December 27th 2010.

4
Mayora Indah - December 28, 2010

APPENDIX
PT. Mayora Indah
Financial Highlights

Consolidated Statements of Income 2007 2008 2009F 2010F 2011F 2012F

Net Sales 2,828.44 3,907.67 4,777.18 5,977.53 7,632.07 9,617.98

Gross Profit 628.56 753.92 1,133.79 1,183.16 1,434.33 1,759.46
Operating Profit 238.71 345.42 613.19 625.74 834.53 1,113.05
Profit Before Tax 209.82 274.07 503.93 540.67 725.91 976.17
Net Profit 141.59 196.23 372.16 421.60 573.89 784.59

Consolidated Balance Sheets 2007 2008 2009F 2010F 2011F 2012F

Cash and Cash Equivalents 120.00 316.33 321.58 217.88 178.10 257.79
Short Term Investment 12.81 27.77 12.67 27.08 34.57 34.73
Current Assets 1,043.84 1,684.85 1,750.42 2,170.29 2,670.92 3,229.62
Non Current Assets 849.33 1,238.14 1,496.07 1,484.74 1,604.90 1,881.95
Total Assets 1,893.17 2,922.99 3,246.49 3,655.03 4,275.82 5,111.56

Current Liabilities 356.12 769.80 764.23 886.01 1,088.27 1,320.85

LT Debt 384.65 987.47 948.04 941.05 825.09 721.80
Non Current Liabilities 428.91 876.52 858.74 913.54 904.78 1,026.32
Total Liabilities 785.03 1,646.32 1,622.97 1,799.55 1,993.05 2,347.17

Total Equity 1,081.79 1,245.11 1,581.75 1,806.24 2,223.28 2,690.74

Total Liabilities and Equity 1,893.17 2,922.99 3,246.49 3,655.03 4,275.82 5,111.56

Cash Flow 2007 2008 2009F 2010F 2011F 2012F

Net sales 2,828.44 3,907.67 4,777.18 5,977.53 7,632.07 9,617.98

Cash From Operating Activities 53.91 (108.87) 460.68 5.61 26.55 226.48
Cash From Investing Activities (170.75) (540.03) (310.18) (159.52) (282.37) (260.71)
Cash From Financing Activities 182.59 751.57 (222.02) (28.59) (78.07) 207.15
Changes in Cash 65.75 102.68 (71.51) (182.51) (333.89) 172.92
Cash At The Beginning Of The Year 54.25 120.00 222.68 151.17 (31.34) (365.23)
Cash At The End Of Year 120.00 222.68 151.17 (31.34) (365.23) (192.31)

Segmentation Information 2007 2008 2009F 2010F 2011F 2012F

Food Processing
Extern Sales 1,692.79 2,250.23 2,596.93 3,074.96 3,702.48 4,328.47
Intern Sales 30.21 44.53 69.36 107.69 166.66 257.09
Total Food Processing 1,723.00 2,294.76 2,666.29 3,182.64 3,869.13 4,585.56
Coffe, Powder, Ins Coffe & Cocoa Beans
Extern Sales 1,135.65 1,657.45 2,181.25 2,892.39 3,893.24 5,201.48
Intern Sales 45.82 77.58 67.07 57.65 49.27 42.35
Total Coffe, Powder, Ins Coffe & Cocoa Be 1,181.47 1,735.03 2,248.32 2,950.05 3,942.51 5,243.83
Others - - - - - -
Elimination (76.03) (122.11) (136.43) (155.16) (179.57) (211.41)
Consolidated Sales 2,828.44 3,907.67 4,778.17 5,977.53 7,632.07 9,617.98

Financial Ratio 2007 2008 2009F 2010F 2011F 2012F

Current Ratio 2.93 2.19 2.29 2.45 2.45 2.45

Quick Ratio 2.58 1.71 2.15 2.28 2.20 2.09
Cash Ratio 7.94 5.08 6.25 6.75 7.01 7.28
NWC to TA 0.36 0.31 0.30 0.35 0.37 0.37

Inventory Turnover 8.25 5.90 7.94 8.51 8.61 8.60

DSinInventory 44.25 61.84 45.94 42.91 42.38 42.45
Receivables Turnover 0.24 0.26 0.42 0.34 0.36 0.42
DSinReceivable 1,510.67 1,398.05 863.96 1,072.17 1,005.68 866.01
NWC turnover 4.11 4.27 4.84 4.65 4.82 5.04
Fixed Asset Turnover 3.65 3.79 3.72 4.51 5.44 5.74

Total Debt Ratio 0.43 0.57 0.51 0.51 0.48 0.47

D/E 0.36 0.79 0.60 0.52 0.37 0.27
Equity Multiplier 1.75 2.35 2.05 2.02 1.92 1.90
LT Ratio 0.23 0.38 0.31 0.28 0.20 0.14
TIE n/a 4.59 5.13 5.92 6.22 6.64
Net Debt 264.65 671.14 626.46 723.16 647.00 464.01
Net Debt to Equity 0.24 0.54 0.40 0.40 0.29 0.17

Gross Margin 22.22% 19.29% 23.73% 19.79% 18.79% 18.29%

Operating Margin 8.44% 8.84% 12.84% 10.47% 10.93% 11.57%
Profit Margim 5.01% 5.02% 7.79% 7.05% 7.52% 8.16%

ROA 7.48% 6.71% 11.46% 11.53% 13.42% 15.35%

ROE 13.09% 15.76% 23.53% 23.34% 25.81% 29.16%
EPS 184.84 256.18 485.85 550.39 749.20 1,024.27
10750 0.51 0.39 0.90 0.13 0.36 0.37
P/E 58.16 41.96 22.13 19.53 14.35 10.50
BVPS 1,412.26 1,625.47 2,064.95 2,358.02 2,902.46 3,512.72
PBV 7.61 6.61 5.21 4.56 3.70 3.06

5
Mayora Indah - December 28, 2010

MAIN OFFICE - JAKARTA

PT BNI SECURITIES
Sudirman Plaza, Indofood Tower 16th Floor, Jl. Jend. Sudirman Kav. 76-78
Jakarta 12910, Indonesia
Phone: (62-21) 25543946 (Hunting)
Fax: (62-21) 57935831
e-mail: [email protected] (General)
Website: http://www.bnisecurities.co.id

JAKARTA - Mangga Dua MALANG

Pertokoan Mangga Dua Blok E4 No. 7 Jl. Buring No. 58 Malang
Jl. Mangga Dua, Jakarta Utara Phone: (62-341) 321214, 321213, 341430
Phone: (62-21) 6123804/5 Fax: (62-341) 356876
Fax: (62-21) 6123806 e-mail: [email protected]
e-mail: [email protected]
DENPASAR
JAKARTA - Wisma 46
Komplek Ruko Agung Raya No. 15
Wisma BNI 46 Lantai 31 Kota BNI
Jl. Teuku Umar Kav. 200
Jl.Jend Sudirman Kav.1 Jakarta 10220 Phone: (62-361) 254985
Phone: 021- 2515266 e-mail: [email protected]
Fax.021-5749837
e-mail: [email protected]
MEDAN
JAKARTA - Puri Indah Jl. Pemuda No. 12
Puri Niaga 3 Blok M8 No. 1B Phone: (62-61) 4579616
Puri Kembangan, Jakarta Barat Fax: (62-61) 4579656
Phone: (62-21) 58357464 e-mail: [email protected]
Fax: (62-21) 58357465
e-mail: [email protected] PALEMBANG
Jl. Jend. Sudirman No. 132, Kotak Pos 165 PLG
BANDUNG Phone: (62-711) 3619662
Jl. Perintis Kemerdekaan No. 3 Fax: (62-711) 3619663
Phone: (62-22) 4213375 e-mail: [email protected]
Fax: (62-22) 4213376
e-mail: [email protected] PEKANBARU
BNI Cabang Pasar Pusat
YOGYAKARTA Jl.Jend Sudirman No.365 Pekanbaru 28282
Gedung BNI, Jl. Laksda Adi Sucipto No.137 Phone: (62-761) 46757, 839698
Phone: (62-274) 581001 Fax: (62-761) 856279
Fax: (62-274) 584023 e-mail: [email protected]
e-mail: [email protected]
SEMARANG
SOLO Thamrin Square Blok B5
Jl.MH Thamrin No.5 Semarang
Jl. Slamet Riyadi No. 348 Phone: (62-24) 3566414-5, 64126413-7
Phone: (62-271) 729667 Fax: (62-24) 3581713
Fax: (62-271) 729668
e-mail: [email protected]
e-mail: [email protected]
ACEH
SURABAYA Jl.KH Akhmad Dahlan No.111 Lt.2
Jl. Pemuda No. 36 Banda Aceh
Phone: (62-31) 5320912
Phone: (62-651) 31109
Fax: (62-31) 5318425
e-mail: [email protected] Fax: (62-651) 31107

This document is not intended to be an offer, or a satisfaction of an offer, to buy or sell relevant securities (i.e. securities mentioned herein or of
the same issuer and options, warrants or rights to or interest in any such securities). The information and opinions contained in this document have
been compiled from or arrived at in good faith from sources believed to be reliable. No representation or warranty, expressed or implied, is made
by BNI SECURITIES or any other member of the BNI Group, including any other member of the BNI Group from whom this document may be
received, as to the accuracy or completeness of the information contained herein. All opinions and estimates in this report constitute our judgment
as of this date and are subject to change without notice.

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