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Dear Siti,
Good morning,
Unilever Indonesia :
“1001 Inspirasi Ramadhan” To Boost Sales
Unilever has just launched an integrated
marketing campaign “1001 Inspirasi Ramadhan” to boost sales this year.
Since Indonesian consumers spend heavily during Ramadan, we believe
this campaign would help the company to increase its sales amid a current
soft consumer spending growth. So far, there has been no price increase by
the company in the 2Q. We maintain our NEUTRAL call with a DCF-derived
IDR42,500 TP (2% downside).
¨ Innovative
marketing program.
Following the success of 2015’s Sunsilk Hijab Hunt, which
significantly boosted shampoo sales, Unilever Indonesia (Unilever) has now
launched the 1001 Inspirasi Ramadhan. The integrated marketing
campaign would be heavily advertised via television and other alternative
media, such as a dedicated website www.1001inspirasiramadhan.com. This campaign
includes all 39 Unilever brands such as Lifebuoy, Pepsodent, Rexona, Bango
and Walls among others. Since the majority of Indonesians – around
220m people – are Muslim, we believe this marketing campaign is likely to
help Unilever boost sales amid current soft consumer spending growth.
¨ Heavy
consumer spending during Ramadan. Having an extra month’s salary,
many Indonesians tend to consume more products during Ramadan and the Eid
celebration. Unilever revealed that its monthly sales usually grow by 5%-7%
MoM during Ramadan; thus the company has increased its halal-certified
products to broaden its Muslim consumer segment. Currently, eight out of nine
of its manufacturing facilities already own halal-manufacturing process
certificate. The company targets for all of its factories to be certified by
3Q16.
¨ However,
overall demand growth is still soft although this year Indonesia’s consumer
spending is likely to be better than in 2015; there is likely no downtrend in
consumer spending as the overall economic climate has stabilised. As a
country dependent on CPO as a source of income, Indonesians benefit from
higher CPO prices but the demand growth of this commodity, in terms of
volume, is still low. As such, Unilever has announced that there would be no
price increase in 2Q16 after it increased prices in 1Q16 by c.2%. It is also
in line with our ground checks on several Unilever products including
detergent, soap, tooth paste and ice cream products.
¨ Maintain NEUTRAL on the counter due
to its rich valuation. Unilever is currently trading at 52x FY16F and 46x
FY17F P/Es respectively, which are above +1SD from its average P/E. Our
DCF-derived IDR42,500 TP reflects 50x FY16F and 45x FY17F P/Es respectively.
Downside risk to our call is the difficulty in passing on cost increases to
customers. Meanwhile, the main upside risk is a significant commodity price
hike, which could increase the income of Indonesians and boost consumer
spending. (Andrey Wijaya)
Link to report: Unilever Indonesia : “1001 Inspirasi Ramadhan” To Boost Sales
Link
to Daily report: Indonesia Morning Cuppa - 160616
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Sector Update:
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Regional
Oil & Gas
- Market Transformation
The IEA’s latest
oil market review re-emphasises our view of strong demand and market
rebalancing. It also cautions of a possible reversal of the situation, should
demand not come through, or supply returns faster than expected. After our
Thai refinery and petrochemical stocks upgrades, we are now OVERWEIGHT on the
downstream and midstream segments and UNDERWEIGHT on the upstream subsector.
Our 2H16 Top Picks are:
1. Thai Oil;
2. PTTGC;
3. PGN. (Kannika Siamwalla,
CFA, Norman Choong, CFA, Wan Mohd Zahidi)
Link to report: Market Transformation
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Economic Highlight:
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Both Indonesia’s Exports and Imports
Recorded a Smaller Contraction
¨ Indonesia’s
exports contracted by a smaller magnitude of 9.8% y-o-y
in May,
from -12.4% in April. This was driven by softer
declines in both oil & gas and non-oil & gas exports, reflecting a
slight pick-up in demand for Indonesia’s exports during the month.
¨ Imports, likewise, contracted by a
significantly smaller magnitude of 4.1% y-o-y in May, from -14.4% in
April, partly affected by Ramadhan month preparation. The smaller contraction
in imports was due to a softer drop in the non-oil & gas, oil product,
and gas imports. These were, moreover, supported further by a rebound in
crude oil imports.
¨ Moving forward, the global economy still faced with many
downside risks and it is in its seventh year of growth in the current
cycle in 2016 where the late stage of an economic growth cycle tends to be
associated with higher downside risk. This suggests that Indonesia’s exports
will likely remain challenging and we expect the country’s real export to
grow marginally by 0.9% in 2016, compared with -2.0% in 2015. (Rizki
Fajar)
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Media Highlights:
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Economics
Government to lower
target on Oil and Gas Production
Corporates
Astra
International’s continues its robust 4W wholesales in May
Astra
International’s 4W monthly wholesales increased to 49k units in May (+3.6%
MoM), while, 2W wholesales declined to 339k units (-2.7% MoM). YoY basis,
although 5M16 wholesales were flat, Astra’s sales better than national’s
which booked lower sales volume. In our calculation, Astra’s 4W market shares
increased to 50.8% in 5M16 (vs. 50.3% in 5M15), as well as its 2W market
shares increased to 72.7% (from 68.1%). LCGC was the main driver of 4W 5M16
sales growth. Maintain BUY with IDR7,400 TP (10% upside), implying FY16F/17F
P/Es of 17x and 16x. (Andrey Wijaya)
Charoen Pokphand to
expand its beverage business
Ciputra Development
recorded IDR2.6trn marketing sales
Medan-Kuala Namu
Toll road progress is in line
Tiphone Mobile
Indonesia to issue bond worth IDR1trn
Sidomulya Selaras to
raise funds of IDR500bn
Tiga Pilar Sejahtera
to issue IDR1.5trn syaria bonds
Best regards,
Helmy Kristanto
Director
Head of Indonesia Research
PT. RHB Securities Indonesia
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