DEPOK (eNBe Indonesia) - Shares of dairy producer Cisarua Mountain Dairy (CMRY), or Cimory, gained 2% to Rp5,100 on Thursday (February 23) to make a market capitalization of Rp40.46 trillion, nearly eight times of equity as at December 31, 2022, one of the most ‘valuable’ companies listed on Indonesia Stock Exchange (IDX).
Traded with PE multiple 38 on full year 2022 earnings, CMRY is considered one of inflated stocks in the market because its return on equity (ROE) was only 20%.
CMRY’s valuation is substantially higher than established and dominant F&B player like Indofood CBP Sukses (ICBP) even if it performed relatively stronger last year.
Cimory reported a 34.2% year on year (y/y) growth in net Profit and a 53.6% y/y growth in sales. The company booked net Profit of Rp1.06 trillion in 2022, up from Rp790 billion in 2021.
While net sales reached Rp6.38 trillion last year, up from Rp4.1 trillion a previous year. Dairy products contributed Rp3.53 trillion, up 34.6% y/y and consumer foods contributed Rp2.84 trillion, up 20% y/y.
Investors might have accumulated CMRY stocks after US-based equity firm General Atlantic invested US$130 million, equivalent to Rp2.02 trillion, or equivalent to 5.64% ownership in CMRY.
General Atlantic is engaged in food and beverage (F&B) business and has experienced on online and offline business.
Noting that, competition in the dairy industry is getting stiffer, which might might push margins down.
The dairy market, fortunately, has a big room to grow because of Indonesia’s relatively low per capita consumption.
Cimory pointed to US$6 per annum dairy consumption in Indonesia, way below Malaysia (US$16), Thailand (US$25.4) and Vietnam (US$32).
Last year, Cimory spent Rp667 billion in new fixed assets, jumped from Rp244.9 billion in 2021, suggesting the company’s future growth.
With nearly half of last year’s Profit paid out to shareholders in cash dividend, one wonder whether that level is too high.
Cimory is controlled by the family of Bambang Sutantio, who is chairman, while sons Wenzel Sutantio and Axel Sutantio are commissioner and director respectively.
While Cimory is famous for dairy products, the company has grown consumer foods division in recent years. Last year, consumer foods grew nearly 100% to Rp2.84 trillion, not too far from dairy products (Rp3.53 trillion).
General Atlantic was reported to divest its shares ownership in MAP Boga Adiperkasa (MAPB). Through its Singapore-based entity GA Robusta F&B Company Ltd, General Atlantic will auction off part or all of its shares in the company that manages the Subway and Starbucks sandwich chains.
General Atlantic now holds 19.4% MAPB shares, while Mitra Adiperkasa (MAPI) controls 79.1% BAPB shares. The public investors own the rest. General Atlantic invested in MAPI in June 2016.
While MAPI said its trategic initiative and restructuring since 2016 was aimed at enabling the MAP Group to strengthen, develop and expand its food and beverage (F&B) business, and to obtain future funding, and a stronger capital structure.
MAPB believes it will benefit from said transaction, to attracting potential investors who will provide long-term support. MAPB has not disclosed yet the MAPB price that General Atlantic will divest.
General Atlantic had also invested US$ 55 million in PT Kalbe Genexine Biologics (KGBio), a subsidiary of PT Kalbe Farma Tbk (KLBF). It was also noted to have led a series C investment worth US$ 150 million to Ruangguru in 2019.
Map Boga Adiperkasa (MAPB), a member of MAP Group and Fast Food Indonesia (FAST), operator of Kentucky Fried Chicken (KFC) outlets, reported a 50% rise in sales, to Rp2.4 trillion in first nine months (9M) of 2022, turning its bottom line into Profit, at Rp106.8 billion, against loss of Rp74 billion a year earlier.***
