Indonesia's Nippon Indosari Corpindo is Baking more Profit in the Oven
The launch of new bread products, the improvement of its distribution network, and an expected increase in people's purchasing power in Indonesia should be reasons for Nippon Indosari Corpindo to continue growing in the years ahead. The company is Indonesia’s largest producer of bread products (as it controls 90 percent of the country's mass bread production market) and it is the only bread producing company that is listed on the Indonesia Stock Exchange. Its Sari Roti line of bread products is a well-known brand in Indonesia.
Nippon Indosari Corpindo, established in 1995, recorded net sales of IDR 1.57 trillion (approx. USD $115 million) in the first nine months of 2015, up 15.3 percent from sales in the same period last year, primarily supported by sales of white bread products (IDR 1.03 trillion). Meanwhile, the company's net profit surged 46.3 percent to IDR 192.7 billion over the same period, surpassing most - if not all - analysts' estimates.
Earlier this year, Nippon Indosari launched two new products: Dorayaki (a sort of cake snack) and the vanilla cream-filled Bun. Dorayaki was introduced in the first quarter of 2015 and accounted for 2 percent of total sales so far this year. Stephen Orlando, Public Relations Officer at Nippon Indosari, said the company targets to launch other new bread products before the year-end.
The bread manufacturer currently owns ten factories, with a total annual bread production capacity of 4.2 million pieces, located in Cikarang (Bekasi), Pasuruan, Semarang, Medan, Palembang, Makassar, Cikande and Purwakarta. The factory in Bekasi, a city that is part of the metropolitan Greater Jakarta area (an important economic region where more than 30 million people reside), accounts for 30 percent of the company's total sales.
The company made good decisions by cutting capital expenditure (capex) by 76 percent to IDR 78 billion and optimize utilization of its existing factories. This strategy boosted the company's cash position by 19 percent to IDR 474 billion and lowered its net gearing ratio to 46.5 percent in the third quarter of 2015. The company also makes good use of promotional activities for marketing purposes.
Future Projection Nippon Indosari Corpindo's Financial Highlights:
| 2013 | 2014 |
2015F | 2016F | 2017F | |
| Net Sales | 1,505.5 | 1,880.3 | 2,200.0 | 2,535.0 | 3,040.0 |
| EBITDA | 294.8 | 383.2 | 519.2 | 580.8 | 647.2 |
| Net Income | 158.0 | 188.6 | 254.2 | 307.1 | 361.3 |
| P/E Ratio (x) | 38.01 | 32.54 | 23.80 | 19.70 | 16.74 |
| PBV (x) | 7.68 | 6.30 | 5.18 | 4.29 | 3.57 |
in billion IDR rupiah, except stated otherwise
Source: CIMB Securities
Stock Quote Nippon Indosari Corpindo - ROTI:
In November 2013, Nippon Indosari Corpindo conducted a 1:5 stock split