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Good morning,
Kino Indonesia –
Company visit takeaways
Kino’s (KINO IJ, NR)
management suggested a turnaround in 3Q17 earnings, driven by higher sales
volume and lower costs. The company reduced the number of contracted labors
and cut unproductive distributors. The company’s share price has declined 43%
YTD. Kino is interesting at the current price, however we see it is better to
wait for earnings recovery sustainability to start accumulating shares. Based
on consensus estimates, the company is trading at 14x/12x FY17F/18F PE with
9% ROE.
Key highlights of
our meeting are as follow:
¨ 3Q17
sales likely to be higher QoQ. Kino indicated that its MoM sales has been
started to recover since July, driven by higher Cap Kaki Tiga sales
tahnks to longer dry season in the quarter which boost remedy drink sales. Cap
Kaki Tiga accounted for around 30% of total sales.
¨ Lower
production and operational costs. To lower its production costs, in June,
Kino reduced its contracted labor by around 20%, then improved automation in
manufacturing process. In addition, Kino terminated unproductive local
distributors to lower operational costs.
¨ New
product launches.
Kino is to launch new products: dry shampoo (under Ellips brand) and
“jamu asam urat” herbal medicine.
¨ Earnings
turnaround.
Despite improved 2H17, Kino indicated FY17F sales to be slightly lower than
previous year, while FY17F earnings may be flat. Kino targets FY18F earning
to grow by 15% YoY. Based on consensus estimates, Kino is trading at 14-12x
FY17-18F with 9% ROE. (Andrey Wijaya)
Link to daily
report: Indonesia Morning Cuppa 280917
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Media Highlights:
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Corporate
World Economic Forum
raises Indonesia’s competitiveness rank
Astra International
announces IDR55 per share interim dividend
Waskita Realty to
acquire 300ha of land until the rest of the year
Jasa Marga eyes
IDR2trn from project bond
Indopora has booked
IDR745bn of new contracts
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Our
Recent Publication:
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Corporate News Flash: United Tractors –
Mining Equipment Sales To Stay Robust
Link to report: United
Tractors : Mining Equipment Sales To Stay Robust
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Economics Update: BI Cuts Key Policy Rate
Further In September
Link to report: BI
Cuts Key Policy Rate Further In September
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Economics Outlook: Stronger Growth in 2018
But Capped By Spending Constraint
Link to report: Stronger
Growth in 2018 But Capped By Spending Constraint
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Corporate News Flash: Astra International –
Vehicle Sales Rise MoM In August
Link to report: Astra
International : Vehicle Sales Rise MoM In August
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Sector News Flash: Telecommunications –
Spectrum Auction In October
Link to report: Spectrum
Auction In October
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Company Update: United Tractors – Boost From Mining
Heavy Equipment Upcycle
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Company Update: Hexindo Adiperkasa – All Good News Is
Already Priced In
Link to report: Hexindo
Adiperkasa : All Good News Is Already Priced In
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Sector Update: Heavy Equipment – Still At
The Start Of An Upcycle
Link to report: Still
At The Start Of An Upcycle
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Economics Update: Exports And Imports
Moderated In August After Festivities
Link to report: Exports
And Imports Moderated In August After Festivities
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Company Update: Bekasi Fajar - JV
Divestment Is Positive
Link to report: Bekasi
Fajar : JV Divestment Is Positive
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Best regards,
Andrey Wijaya
Senior Vice President
Research Analyst – Auto, Consumer, Cement
PT RHB Sekuritas Indonesia
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