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19 November 2018 (closed)
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PT Hanjaya Mandala Sampoerna Tbk (HM Sampoerna) is Indonesia's largest tobacco company controlling about 35 percent of the Indonesian tobacco market. HM Sampoerna operates seven manufacturing facilities in Indonesia: two machine-made kretek ('SKM') production facilities and 5 handrolled kretek ('SKT') production facilities (kretek are the highly popular clove cigarettes that are a trademark of Indonesia). The company also distributes the famous Marlboro brand on the domestic market. In 2005 Sampoerna was sold to Philip Morris, an international cigarette and tobacco giant. HM Sampoerna is one of the largest Indonesian companies on the Indonesia Stock Exchange (IHSG) in terms of market capitalization.
|Industry Sector||Consumer Goods Industry|
|Industry Sub Sector||Tobacco Manufacturers|
|Established||27 March 1905|
|Listed||15 August 1990|
|Listed Company Code||HMSP|
|Major Shareholders (>5%)||Philip Morris Indonesia (92.50%)|
|Key Subsidiaries||Perusahaan Dagang dan Industri Panamas
Handal Logistik Nusantara
Sampoerna Air Nusantara
Taman Dayu Dinamika
Stock Quote HM Sampoerna - HMSP:
Visible in the chart below HM Sampoerna conducted a 25-for-1 stock split in June 2016 in a bid to boost liquidity
HM Sampoerna is the number one cigarette brand in Indonesia and the world's largest kretek (clove) cigarette manufacturer. It is the producer of some of the most well-known kretek cigarette brands, such as Sampoerna Hijau, Sampoerna A Mild, and the legendary “King of Kretek” Dji Sam Soe. On 18 May 2005, the company was acquired by Philip Morris International, thus becoming part of one of the world’s largest tobacco companies. Today, the company also distributes Marlboro, the world’s best-selling cigarette brand, in Indonesia.
Sampoerna sells and distributes cigarettes through a total of 106 sales offices on the islands of Sumatra, Java, Bali and Kalimantan as well as in Eastern Indonesia.
Sales & Distribution Locations HM Sampoerna:
The kretek-type cigarettes are tremendously popular among Indonesia's population. It is the favorite cigarette of Indonesian cigarette consumers. About two-thirds of Indonesian men smoke, and are thus known as the world's top smokers. The percentage of Indonesian women that smoke is small (approx. five percent) as it is considered negative for a woman to smoke. Recently, however, there has been a large increase in female smokers among the country's middle class in the urban areas.
The company conducted a successful rights issue in October 2015, which was the largest-ever secondary placement in Southeast Asia and the largest equity offering in Indonesia since 2008.
HM Sampoerna's Financial Highlights:
in billion IDR rupiah, unless stated otherwise
¹ in IDR rupiah
² adjusted to stock split
Source: HM Sampoerna, Annual Report 2016
Overview of the Tobacco Industry in Indonesia
Indonesia has a large and diverse tobacco consumer market with a significant percentage of adult smokers. Approximately 67 percent of Indonesian men and 5 percent of Indonesian women are smokers (Indonesia contains a total population of over 250 million people). Raw materials are mostly sourced domestically and in combination with cheap labour it makes production costs relatively low. As such, the price of a package of cigarettes in Indonesia is cheap. This has also been the reason why Indonesia's tobacco industry was not touched by the recent global economic downturn. Indonesians continue to consume more cigarettes, although exports have declined. However, exports contribute little to Indonesian tobacco producers' sales and profit figures and therefore the declining export numbers are not an issue.
The most popular cigarettes in Indonesia are kretek cigarettes. About 85 percent of all smokers in Indonesia prefer kretek cigarettes to white cigarettes. Kretek are clove cigarettes that consist of tobacco (70 percent) and ground cloves, clove oil and other additives (30 percent). The kretek cigarette is a trademark of Indonesia.
Issues that can curb expansion of the tobacco industry in Indonesia are government policies. The government regularly decides to increase taxes or excises on cigarettes. Moreover, the government issued new rules that order tobacco companies to put various warning labels on cigarette packages, aimed at warning consumers about its health effects. In other words, it aims to make cigarettes less attractive.
Lastly, weak clove harvests in Indonesia can cause temporarily high production costs (as happened in 2012).
There are four Indonesian tobacco companies that are listed on the Indonesia Stock Exchange (IDX):
Both Gudang Garam and HM Sampoerna are among the companies with the largest market capitalization in Indonesia.
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