Alex Wijaya

Arfan Wiraguna
Danang Yudha Prakasa
Peter Ronald

ICBP Stock Valuation

stock valuation is the method of calculating theoretical values of companies
and their stocks. The main use of these methods is to predict future market
prices, or more generally, potential market prices, and thus to profit from
price movement stocks that are judged undervalued (with respect to their
theoretical value) are bought, while stocks that are judged overvalued are
sold, in the expectation that undervalued stocks will, on the whole, rise in
value, while overvalued stocks will, on the whole, fall. We choose ICBP, a
company in consumer goods sector, sub-sector food and beverages, because
the amount of customers in this sector is very big. We will provide the
analysis and recommendation about ICBP stock price.
Background
PT Indofood CBP Sukses Makmur Tbk provides a wide range of food
products. The Company is a total food solutions company with operations in all
stages of food manufacturing from the production of raw materials and their
processing through to consumer products on the retailer's shelf. Knowing what an
asset is worth and what determines that value is a pre-requisite for intelligent
decision making. The premise of valuation is that we can make reasonable estimates
of value for most assets, and that the same fundamental principles determine the
values of all types of assets, real as well as financial. With this analysis we will
inform why ICBP stock worthed to buy.
Analysis
ISBP consistently committed to good corporate governance (GCG) practices
in conducting its business activities and recognizes that adequate implementation of
risk management system is crucial to face various risks in the business, along with
the Companys business growth. Therefore, the Company manages its risks by
implementing ERM consistently and continuously throughout the entire organization,
including its subsidiaries.
ICBP have joint venture with asahi food japan with the product is RTD tea
ICHI OCHA to grab RTD tea market especially in Japanese tea, ocha, and now
available on the market and its priced at a similar level as rival products.
The latest issue is the acquisition of 100% of PT Danone Dairy Indonesia company
that engaged in the field of liquid milk and also acquire Danone Dairy Indonesias
trademark and industrial design for its top product, Milkuat. With this process, ICBP
dairy division, Indolakto, will be the top three in Indonesia.

Alex Wijaya
Arfan Wiraguna
Danang Yudha Prakasa
Peter Ronald

In valuing Indofood CBP Tbk we used DCF Method. Valuation scenario is

calculated based on sales growth from 2012 to 2013 which is 16.31%. Based on
quarter reports in 2014, sales is already reached 21.4%, it means already increase
31% from 2012-2013 growth.

ROE, EPS, P/E Ratio

2012
2013
ROE
20.1
17.7
EPS
374
382
End year price
7,800 10,200
P/E Ratio
20.86
26.70
*according to annual report 2012
**according to annual report 2013
***Source: bloomberg.com

2014E***
n/a
457.9
n/a
25.65

The fair price with valuation using DCF is IDR 12.330. Stock price on Dec
5 is IDR 11.750. The price is undervalue.
EPS of this stock still in small amount, about 5% on 2012 and 4% on 2013
according to their end year price. But instead of EPS, investor still be able to gain
profit from increasing of stock prices. Besides future company prospects could be
guarantee that investment on this stock will give good return in long term period. P/E
ratio of this stock look promising for long term investment.
th

Recommendation
We recommend to buy ICBP stock because of the price is undervalue. The
price is high, but still make a profit. The biggest revenue, noodle division, maybe in
mature condition but the company continue to expand in dairy, snack, beverage, and
the packaging.