Equity Company Update PT BW Plantation Tbk

27-Oct-2014
Equity
Company Update
PT BW Plantation Tbk
Maula Adini Putri
maula.adini@aaasecurities.com
+62-21-29916600 ext. 6654
Massive Rights Issue Plan
BWPT’s plan to acquire Green Eagle Holding (GEH) is considered expensive while in
the long-run it will increase economies of scale. Meanwhile, BWPT 1H14 performance
BWPT IJ / BWPT.JK
was relatively in-line with our estimates, with 36.3% yoy growth in sales and bottom
Plantation
line profit growth at 67.3% yoy. Due to the dilutive impact of the right issue price we
downgrade our TP to Rp560 HOLD.
HOLD (TP Rp560)
Downgrade
(prev TP Rp1,500)
Last Price (Rp)
Upside
BWPT’s massive rights issue plan
565
BWPT’s plan to acquire Green Eagle Holding Ltd. (GEH), an affiliate of Rajawali Capital,
-
is deemed pricey. It is going to fund it through the rights issue amounted to Rp10.5 tn –
1,154
Rp 11.1tn at price per share of Rp390 - Rp411, a 60% discount from its market price
1,425– 405
before the acquisition was announced. At ratio of 1:6, this plan will result in 85%
Consensus (Rp)
52 W High / Low (Rp)

16.1
dilution of the minority shareholders assuming many will be forced not to exercise their
Issued Shares (mn shares)
4,504
rights as the magnitude of the new issue is huge. Rajawali Capital will emerge as the
Market Cap (Rp bn)
2,544.
majority shareholder as existing shareholders, i.e. BW Investindo, Matacuna and
52 W Daily Avg Vol (mn shares)
Pegasus have agreed not to exercise their rights. It is also worth noting that the floating
shares will decline to 4.9% from 34.9% previously. Post acquisition, BWPT will own
Stock Performance
% ch ang e
1 M
3 M
12 M
- 0.7 %
5 .2 %
1 8. 3%
419,000 ha, from currently 94,513 ha.

GEH value
The implied EV/ha of GEH is at US$15,516 versus average industry of US$9,516 or equal
30.0%
to 4.3x PBV. GEH still suffered losses during the last three years. GEH’s DER in 1H14 is at
20.0%
2.1x, while BWPT’s DER is at 1.5x.
10.0%
0.0%
Apr-12
-10.0%
Jun-12
Aug-12
Oct-12
Dec-12

Feb-13
-20.0%
BWPT’s 1H14 performance at a glance
In 1H14, BWPT posted 36.3% yoy increase in sales to Rp744.9 bn (1H13: Rp546.3) in line
-30.0%
with our forecast and reflected 49.5% of our FY14F numbers. The increase in sales is
-40.0%
JCI
BWPT
mainly derived from higher average selling price by 29.0% yoy. Further, the bottom line
profit increased by 67.3% yoy to Rp141.2 bn (1H13: Rp84.4 bn) as operating income
edged up to 51.5% yoy. The profitability margins increased with GPM of 45.6% (1H13:
43.7%), OPM of 30.2% (1H13: 27.2%), and NPM of 19.0% (1H13: 15.5%).
Major Shareholders :
PT BW Investindo
38.89%
Fendalton Investment Pte. Ltd.
23.33%
Other (<5%)
17.15%
Public
20.63%
Valuation: downgrade TP to Rp560
We downgrade our TP to Rp560 while waiting for the result of the extraordinary
meeting which will be held on 10 November 2014. Our new TP implied FY15F PE of
36.4x due to significantly lower EPS as a result of the rights issue. HOLD.
Earnings Estimates
Financial Summary
2014F
2015F
AAA Estimate
304
486
Consensus
355
514
Net Profit (Rp bn)
EPS (Rp)
AAA EPS
68
15
Consensus EPS
79
109
PT Andalan Artha Advisindo Sekuritas
2012
2013
2014F
2015F
2016F
Sales (Rp bn)
944
Gross Profit (Rp bn)
571
Operating Profit (Rp bn)
417
Net Profit (Rp bn)
262
EPS (Rp)
65
EPS Growth
-18%
PER (x)
8.5
PBV (x)
1.3
Source: Company, AAA Securities
1,144
541
326
182
41
-31%
13.5
1.1
1,505
865
509
304
68
67%
8.1
0.2
2,491
1,389
799
486
15
60%
35.7
1.2
3,146
1,742
994
594
19
22%
29.2
1.2
P a g e |1
Company Update | 27-Oct-2014
PT BW Plantation Tbk
GEH Profile:
GEH has total planted area of 71,630 ha with 66,748 ha is nucleus plantation area and 4,882 is plasma plantation vs. BWPT
which has 61,948 ha planted area. GEH’s total mature area is 43,198 ha with immature area of 28,432 ha given an average
plantation age of 8.4 years vs. BWPT of 7.7 years. GEH owns total unplanted land bank of 324,493 ha spread in Kalimantan,
Sumatera, and Papua. This acquisition should boost total land bank area of BWPT, from 94,513 ha to 419.006 ha.
Revised Forecast Number
2014F
2015F
Old
New
% chg
Old
New
% chg
Sales (Rp bn)
1,505
1,505
0.0%
2,010
2,491
23.9%
COGS (Rp bn)
640
640
0.0%
852
1,102
29.2%
Gross Profit (Rp bn)
865
865
0.0%
1,158
1,389
20.0%
Operating Expense (Rp bn)
308
356
15.6%
412
590
43.2%
Operating Profit (Rp bn)
557
509
-8.6%
746
799
7.1%
Net Profit (Rp bn)
341
304,379
-10.6%
461
486
5.3%
Source: AAA Securities
Sales breakdown
Nucleus and plasma composition as per FY13
Kernel, 6.7%
Fresh fruit
bunches
4.2%
Plasma
10.6%
Crude Palm Oil,
89.0%
Nucleus
89.4%
Source: Company
Source: Company
Planted area
Profitability margins growth
80.0%
70.0%
60.0%
50.0%
GPM
Immature
40.2%
40.0%
OPM
30.0%
Mature
59.8%
NPM
20.0%
10.0%
0.0%
2008
Source: Company
PT Andalan Artha Advisindo Sekuritas
2009
2010
2011
2012
2013
2014F 2015F 2016F
Source: Company
P a g e |2
Company Update | 27-Oct-2014
PT BW Plantation Tbk
Balance Sheet
Year-end 31 Dec (Rp bn)
Key ratio analysis
2012
2013
2014F
2015F
2016F
Cash and equiv
Year-end 31 Dec
2012
2013
2014F
2015F
2016F
Profitability
Assets
51
68
128
288
325
Gross margin
60.5%
47.3%
57.5%
55.8%
55.4%
Receivables
16
28
38
112
142
Operating margin
44.2%
28.5%
33.8%
32.1%
31.6%
Inventories
216
159
196
337
429
EBITDA margin
54.6%
41.8%
48.1%
45.2%
45.0%
53
63
73
120
151
Net Profit margin
27.8%
15.9%
20.2%
19.5%
18.9%
1,047
ROA
5.3%
2.9%
1.7%
2.2%
2.5%
ROE
15.7%
8.3%
2.2%
3.5%
4.1%
Others
Total current assets
Net fixed assets
335
319
435
856
691
799
1,508
3,052
3,878
Other assets
3,887
5,082
16,316
17,933
18,418
Total assets
4,913
6,200
18,259
21,842
23,342
Growth
Revenue
6.3%
21.2%
31.5%
65.5%
26.3%
-13.6%
-22.0%
56.2%
57.1%
24.4%
-3.2%
-7.2%
51.4%
55.3%
25.9%
Current ratio (x)
0.7
0.4
0.4
0.5
0.4
Quick ratio (x)
0.2
0.1
0.2
0.2
0.2
Debt to equity (x)
1.7
1.7
1.7
0.5
0.5
Interest cov. (x)
5.0
3.0
3.6
4.0
3.7
Operating Profit
Liabilities and equities
EBITDA
Payables
256
204
413
697
830
ST. debt and curr.
maturity
177
362
462
777
1,516
81
149
129
214
247
2,684
3,245
3,654
6,122
6,205
49
56
62
97
127
Total Liabilities
3,247
4,016
4,720
7,907
8,924
Shareholders' equity
1,666
2,185
13,539
13,934
14,418
411
489
3,028
442
458
2012
2013
2014F
2015F
2016F
Year-end 31 Dec (Rp bn)
Sales
944
1,144
1,505
2,491
3,146
Net Profit
COGS
373
603
640
1,102
1,403
Dep & amortization
Gross profit
571
541
865
1,389
1,742
EBITDA
515
478
724
1,125
1,416
Operating expense
154
216
356
590
Operating profit
417
326
509
Pre-tax profit
351
255
406
0
0
262
65
Other current liabilities
LT. debt
Other long term liabilities
BVPS (Rp)
Solvability
Source: Company, AAA Securities
Source: Company, AAA Securities
Income statement
Year-end 31 Dec (Rp Bn)
Minority interest
Net profit
EPS (Rp)
Cash Flow
2012
2013
2014F
2015F
2016F
262
182
304
486
594
98
153
216
325
421
Chg in working cap
(54)
9
142
50
(3)
Others
185
41
(9)
58
16
748
Total CFO
492
384
653
918
1,028
799
994
Capex
(836) (1,411)
(1,548)
(2,641)
(2,283)
647
791
Chg in goodwill
25
0
0
0
0
0
(39) (10,635)
(846)
551
182
304
486
594
(1,528) (1,456) (12,158)
(3,487)
(1,731)
41
68
15
19
Source: Company, AAA Securities
(19)
Chg in other assets
Total CFI
(673)
Chg in capital
(6)
27
383
11,106
0
0
(49)
(47)
(56)
(90)
(110)
1,022
746
510
2,783
821
29
7
6
35
30
1,029
1,090
11,565
2,728
741
Chg in cash
(8)
18
60
160
38
Beginning cash
58
51
68
128
288
Ending cash
51
68
128
288
325
Dividend
Net chg in debt
Chg in other liabilities
Total CFF
Source: Company, AAA Securities
PT Andalan Artha Advisindo Sekuritas
P a g e |3
Company Update | 27-Oct-2014
PT BW Plantation Tbk
PT Andalan Artha Advisindo Sekuritas
(Member of Indonesia Stock Exchange)
General :+62-21-2991 6600
 Investment Banking : +62-21-2991 6688
 Fixed Income Dealing :+62-21-2991 6666
 Equity Dealing :+62-21-2991 6700
22/F Equity Tower Building
Jalan Jenderal Sudirman Kav. 52-53
Jakarta 12190, Indonesia
Facsimile:+62-21-5152266
E-mail: all_research@aaasecurities.com
INVESTMENT RATINGS
Buy: Expected positive total returns of 10% or more over the next 12 months
Neutral: Expected total returns of between -10% and +10% over the next 12 months
Sell: Expected negative total returns of 10% or more over the next 12 months.
DISCLAIMER: The information contained herein has been compiled from sources that we believe to be reliable. No warranty (express or implied) is made
to the accuracy or completeness of the information. All opinions and estimates included in this report constitute our judgment as of this date, without
regards to its fairness, and are subject to change without notice. This document has been prepared for general information only, without regards to the
specific objectives, financial situation and needs of any particular person who may receive it. No responsibility or liability whatsoever or howsoever arising
is accepted in relation to the contents hereof by any company mentioned herein, or any their respective directors, officers or employees. This document
is not an offer to sell or a solicitation to buy any securities. This firms and its affiliates and their officers and employees may have a position, make
markets, act as principal or engage in transaction in securities or related investments of any company mentioned herein, may perform services for or
solicit business from any company mentioned herein, and may have acted upon or used any of the recommendations herein before they have been
provided to you. Available only to person having professional experience in matters relating to investments. © PT Andalan Artha Advisindo Sekuritas
2013.
PT Andalan Artha Advisindo Sekuritas
P a g e |4