2,060

February 7, 2020

HM Sampoerna (HMSP IJ)

BUY
QoQ volume improvement Share Price
12m Price Target
IDR 2,060
IDR 2,350 (+20%)
Previous Price Target IDR 2,350

Volume momentum, maintain BUY Company Description

HM Sampoerna manufactures, markets and
Volume growth continued to build momentum from 2Q into 4Q19. For
distributes cigarettes.
2020, we expect volume drop on the back of higher ASP but this will be
Consumer Staples

offset by higher profitability. Dividend yield is one of the highest in the

JCI. Maintain BUY with a TP of IDR2,350, based on 20x FY20E P/E, a 50%
premium vs GGRM (IDR57,000, BUY, TP IDR69,000). Lower-than-expected Statistics
volume is the main risk to our call. 52w high/low (IDR) 3,920/1,900
3m avg turnover (USDm) 5.8
Improving 4Q19 volume… Free float (%) 7.5
Issued shares (m) 116,318
4Q19 volume increased 5.6% QoQ to 26.4b sticks. 2019 volume declined Market capitalisation IDR239.6T
2.8% YoY, which was expected, to 98.5bsticks, in line with our forecast of USD17.6B
98.4b sticks. The QoQ volume growth was contributed by HMSP’s two Major shareholders:
major brands: Dji Sam Soe and Sampoerna, which grew 8.7% and 4.2%, PT Philip Morris Indonesia 92.5%
respectively. Both contributed to 70% of total volume in the quarter. na na
Price
na Performance na

…and market share 5,000 110

Indonesia

4,500 100
4Q19 market share improved to 32.7% from 3Q19's 32.3% due to the
4,000 90
industry's lower volume growth of 4.4%. 2019 market share of 32.1% was
3,500 80
lower than 2018's 33.4%. This was because HMSP increased ASPs in the
beginning of 2019 ahead of its competitors. 3,000 70

2,500 60

Management optimism 2,000 50

Management is optimistic that 2020 volume will drop by only 6-7% YoY. 1,500
Feb-18 May-18 Aug-18 Nov-18 Feb-19 May-19 Aug-19 Nov-19
40

This is higher than our 2020 volume growth assumption of -15%. Every 1%
change in volume impacts our 2020 earnings forecast by 5.4%. HM Sampoerna - (LHS, IDR) HM Sampoerna / Jakarta Composite Index - (RHS, %)

-1M -3M -12M

Absolute (%) (4) (1) (45)
Relative to index (%) 0 3 (39)
Source: FactSet

FYE Dec (IDR b) FY17A FY18A FY19E FY20E FY21E

Revenue 99,091 106,742 105,917 108,421 119,298
EBITDA 16,976 17,835 16,512 18,417 19,765
Core net profit 12,671 13,538 12,624 14,090 15,123
Core EPS (IDR) 109 116 109 121 130
Core EPS growth (%) (0.7) 6.8 (6.8) 11.6 7.3
Net DPS (IDR) 107 116 109 121 130
Core P/E (x) 43.4 31.9 19.0 17.0 15.8
P/BV (x) 16.1 12.2 7.0 6.7 6.5
Net dividend yield (%) 2.3 3.1 5.3 5.9 6.3
ROAE (%) 37.1 39.0 36.2 40.1 41.5
ROAA (%) 29.6 30.2 27.4 30.3 31.3
EV/EBITDA (x) 32.0 23.3 13.7 12.2 11.4
Net gearing (%) (incl perps) net cash net cash net cash net cash net cash
Consensus net profit - - 14,757 15,595 16,832
MKE vs. Consensus (%) - - (14.5) (9.6) (10.2)

Isnaputra Iskandar, CFA

isnaputra.iskandar@maybank-ke.co.id
(62) 21 8066 8680

THIS REPORT HAS BEEN PREPARED BY PT MAYBANK KIM ENG SECURITIES

SEE PAGE 8 FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS
HM Sampoerna

According to Philip Morris International (PM US, USD86.18, Not Rated), HMSP’s
4Q19 volume was 26.4b sticks, up 5.6% QoQ but down 1.8% YoY. FY19 volume
dropped 2.8% YoY to 98.5b sticks, in line with our forecast of 98.4b sticks. The
YoY drop was expected as a result of HMSP’s more aggressive pricing strategy
than its competitors’.

The QoQ volume growth was due to higher volumes in its major brands. Dji Sam
Soe volume posted the highest growth (+8.7%), followed by Sampoerna’s +4.2%
and other brands’ +3.7%. In terms of 4Q19 volume contribution, Sampoerna was
the highest with 35% market share, followed by Dji Sam Soe’s 30% and other
brands’ 30%.

Fig 1: 4Q19 volume up QoQ

1Q19 2Q19 3Q19 4Q19 QoQ 4Q18 4Q19 YoY 2018 2019 YoY
HMSP volume, b sticks 22.1 24.9 25.0 26.4 5.6% 26.9 26.4 -1.8% 101.4 98.5 -2.8%
Sampoerna 7.9 9.4 8.8 9.1 4.2% 10.4 9.1 -12.2% 39.5 35.1 -11.1%
Dji Sam Soe 6.7 7.8 8.6 9.3 8.7% 8.0 9.3 16.2% 29.2 32.4 11.1%
Industry volume, b sticks 68.7 79.8 77.5 80.9 4.4% 78.5 80.9 3.0% 303.6 306.9 1.1%
Market share 32.2% 31.3% 32.3% 32.7% 34.3% 32.7% 33.4% 32.1%
Source: Company, Maybank Kim Eng

HMSP’s market share was up slightly to 32.7% in 4Q19 from 32.3% in 3Q19 as
industry volume only increased 4.4% QoQ, lower than HMSP’s 5.6%. On a full-year
basis, 2019 market share dropped to 32.1% from 2018’s 33.4% as HMSP adopted a
more aggressive pricing strategy than its competitors in the beginning of 2019.
The aggressive strategy was in anticipation of a rise in excise-tax in 2019, which
did not materialize.

Fig 2: Sampoerna and Dji Sam Soe remained the main brands Fig 3: Improving market share in 2020
100% 85.0 35.0%
90% 75.0 34.5%
33% 32% 32% 31% 34% 31% 31% 30%
80% 34.0%
65.0
70% 33.5%
60% 55.0 33.0%
29% 28% 29% 30% 31% 34% 35%
50% 30% 45.0 32.5%
40% 35.0 32.0%
30% 31.5%
25.0
20% 38% 41% 39% 39% 36% 38% 35% 35%
31.0%
10% 15.0 30.5%
0% 5.0 30.0%
1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

Sampoerna Dji Sam Soe Others Industry volume (b sticks - LHS) HMSP market share

Source: Company Source: Company

We forecast 2020 net profit to grow 11.6% YoY to IDR14,090b on the back of
higher profitability of IDR524/stick (+16.0% YoY). This will offset our 15% volume
drop estimate for the year. We take a more pessimistic view vs management,
which expect volume will only decline by 6-7%.

We think management’s optimism is based on the anticipation that smokers will

trade down rather than quit smoking. According to management, the blended
average excise-tax increase of 23% in 2020 looks acceptable as there was no rise
in 2019. Please refer to our report dated 8 Nov 2019 titled Shared optimism.

February 7, 2020 2
HM Sampoerna

Fig 4: Summary of assumptions and P&L Fig 5: We forecast volume to be relatively resilient in 2020
2019 2020F 2021F 120 b sticks 25%
Assumptions
Volume, b sticks 98 84 84 100
20%
growth -3.0% -15.0% 0.0%
Blended ASP (A), IDR/stick 1,077 1,297 1,427 80
15%
growth 2.3% 20.4% 10.0%
Excise & taxes (B), IDR stick 625 773 878 60
growth 4.3% 23.6% 13.6% 10%
Profitability (A-B), IDR/stick 452 524 549 40
growth -0.4% 16.0% 4.7% 5%
20
P&L, IDR b
Sales 105,917 108,421 119,298
0 0%
growth -0.8% 2.4% 10.0% 2011 2012 2013 2014 2015 2016 2017 2018 2019F 2020F
EBIT 15,782 17,687 19,034
growth -6.5% 12.1% 7.6% Volume (LHS) ASP increase (RHS)
Net profit 12,624 14,090 15,123
Source: Company, Maybank Kim Eng
growth -6.8% 11.6% 7.3%
Source: Company, Maybank Kim Eng

Fig 6: 2020 earnings sensitivities to ASP and volume

2020 earnings,
Change
IDR b
ASP -1% 13,329 -5.4%
Base case 14,090
ASP +1% 14,852 5.4%

Volume -1% 13,430 -4.7%

Base case 14,090
Volume +1% 14,750 4.7%
Source: Maybank Kim Eng

February 7, 2020 3
HM Sampoerna

Value Proposition Price Drivers

 Market leader of Indonesian cigarette industry. Growth is Historical share price trend
derived from acquiring new smokers and passing on cost
4
increases through ASP hikes. 5,500 2 220
 Dominance in the mild segment serves as a competitive 5,000
3
200
1 5
advantage as consumers are shifting to the segment. 4,500 180
 Relatively solid pricing power helps the company to pass 4,000 160
on the tax increases to consumers. 3,500 140
3,000 120
 Consumers’ preference for clove cigarettes is a natural
2,500 100
entry barrier for multinational newcomers.
2,000 80
 Return on capital is above cost of capital. DPR consistently
1,500 60
at c.100% over the past 4 years on asset-light business Feb-15 Feb-16 Feb-17 Feb-18 Feb-19

model and strong FCF generation. HM Sampoerna - (LHS, IDR)

HM Sampoerna / Jakarta Composite Index - (RHS, %)

HMSP’s revenue breakdown

Source: Company, Maybank Kim Eng, Factset

1. Rights issue to increase free float.

2. Mild volume performance but earnings were supported by
higher financing income.
3. Volume showed improvements over 2-4Q17 but the
earnings came below expectation for 4Q17.
4. Major brands experienced volume decline over 2018.
5. Government planned to increase excise tax.

Source: Company, Maybank KE

Financial Metrics Swing Factors

 Our revenue CAGR of 4% over 2018-21E is mainly driven by
ASP hike to pass on cost increase from higher tax.
 Forecast volume to drop 5% CAGR but gross margin to
increase 135bps during the same period due to aggressive
pricing strategy.
 Capex to remain moderate in the medium term, mainly for
maintenance as the major spending was done before 2015.
 Higher financing income to support earnings growth.
Upside
 Strong performance of new products in the machine-
rolled segment.
 Consumers’ shift back to hand-rolled cigarettes.
 Stricter regulations combating illicit cigarettes that
promote faster industry consolidation.

Downside
Financing income
Financing Financing income As % to  Higher-than-expected tax increase or addition of new tax
1,200 income Financing income/Pretax profit pretax profit 6% on cigarette companies.
(IDR bn)
1,000 5%  Surge in raw material prices that lead to higher costs.
 Consumer safety issues that could damage the company’s
800 4% image or branding.
600 3%

400 2%

200 1%

0 0%
11 12 13 14 15 16 17 18 19E 20E 21E

Source: Company, Maybank KE

isnaputra.iskandar@maybank-ke.co.id

February 7, 2020 4
HM Sampoerna

FYE 31 Dec FY17A FY18A FY19E FY20E FY21E

Key Metrics
P/E (reported) (x) 35.9 34.3 19.0 17.0 15.8
Core P/E (x) 43.4 31.9 19.0 17.0 15.8
P/BV (x) 16.1 12.2 7.0 6.7 6.5
P/NTA (x) 16.1 12.2 7.0 6.7 6.5
Net dividend yield (%) 2.3 3.1 5.3 5.9 6.3
FCF yield (%) 2.6 4.7 5.0 5.6 5.4
EV/EBITDA (x) 32.0 23.3 13.7 12.2 11.4
EV/EBIT (x) 33.7 24.6 14.3 12.7 11.9

INCOME STATEMENT (IDR b)

Revenue 99,091.5 106,741.9 105,917.3 108,420.9 119,298.3
Gross profit 24,215.8 25,490.8 24,988.4 27,287.9 29,359.2
EBITDA 16,976.2 17,834.8 16,512.2 18,417.1 19,765.3
Depreciation (864.9) (952.9) (730.0) (730.0) (731.0)
Amortisation 0.0 0.0 0.0 0.0 0.0
EBIT 16,111.3 16,881.9 15,782.2 17,687.1 19,034.3
Net interest income /(exp) 791.2 973.4 1,050.0 1,100.0 1,130.0
Associates & JV 6.5 7.0 0.0 0.0 0.0
Exceptionals 0.0 0.0 0.0 0.0 0.0
Other pretax income (14.2) 98.9 0.0 0.0 0.0
Pretax profit 16,894.8 17,961.3 16,832.2 18,787.1 20,164.3
Income tax (4,224.3) (4,422.9) (4,208.1) (4,696.8) (5,041.1)
Minorities 0.0 0.0 0.0 0.0 0.0
Reported net profit 12,670.5 13,538.4 12,624.2 14,090.3 15,123.2
Core net profit 12,670.5 13,538.4 12,624.2 14,090.3 15,123.2

BALANCE SHEET (IDR b)

Cash & Short Term Investments 7,501.7 15,516.4 13,884.5 14,783.6 13,949.5
Accounts receivable 3,597.9 3,507.6 3,480.5 3,562.8 3,920.2
Inventory 18,023.2 15,183.2 15,123.0 15,161.1 16,806.7
Property, Plant & Equip (net) 6,890.8 7,288.4 8,058.4 8,578.4 9,097.4
Intangible assets 0.0 0.0 0.0 0.0 0.0
Investment in Associates & JVs 63.4 70.4 70.4 70.4 70.4
Other assets 7,064.0 5,036.3 4,997.4 5,115.5 5,628.8
Total assets 43,141.1 46,602.4 45,614.3 47,271.9 49,473.0
ST interest bearing debt 0.0 0.0 0.0 0.0 0.0
Accounts payable 3,666.4 3,450.1 3,436.4 3,445.1 3,819.0
LT interest bearing debt 0.0 0.0 0.0 0.0 0.0
Other liabilities 5,362.0 7,794.0 7,734.0 7,917.0 8,711.0
Total Liabilities 9,028.1 11,244.2 11,170.3 11,361.8 12,529.9
Shareholders Equity 34,113.0 35,358.3 34,444.0 35,910.2 36,943.1
Minority Interest 0.0 0.0 0.0 0.0 0.0
Total shareholder equity 34,113.0 35,358.3 34,444.0 35,910.2 36,943.1
Total liabilities and equity 43,141.1 46,602.4 45,614.3 47,271.9 49,473.0

CASH FLOW (IDR b)

Pretax profit 16,894.8 17,961.3 16,832.2 18,787.1 20,164.3
Depreciation & amortisation 864.9 952.9 730.0 730.0 731.0
Adj net interest (income)/exp 0.0 0.0 0.0 0.0 0.0
Change in working capital 939.2 2,714.0 73.6 (111.8) (1,629.1)
Cash taxes paid (4,224.3) (4,422.9) (4,208.1) (4,696.8) (5,041.1)
Other operating cash flow 0.0 0.0 0.0 0.0 0.0
Cash flow from operations 15,395.7 21,686.8 13,425.4 14,715.8 14,256.5
Capex (880.7) (1,414.9) (1,500.0) (1,250.0) (1,250.0)
Free cash flow 14,515.1 20,271.9 11,925.4 13,465.8 13,006.5
Dividends paid (12,530.0) (12,480.0) (13,538.4) (12,624.2) (14,090.3)
Equity raised / (purchased) (202.6) 186.9 0.0 0.0 0.0
Change in Debt 0.0 0.0 0.0 0.0 0.0
Other invest/financing cash flow 663.0 35.9 (18.9) 57.5 249.7
Effect of exch rate changes 0.0 0.0 0.0 0.0 0.0
Net cash flow 2,445.6 8,014.7 (1,631.9) 899.1 (834.2)

February 7, 2020 5
HM Sampoerna

FYE 31 Dec FY17A FY18A FY19E FY20E FY21E

Key Ratios
Growth ratios (%)
Revenue growth 3.8 7.7 (0.8) 2.4 10.0
EBITDA growth 1.4 5.1 (7.4) 11.5 7.3
EBIT growth 0.6 4.8 (6.5) 12.1 7.6
Pretax growth (0.7) 6.3 (6.3) 11.6 7.3
Reported net profit growth (0.7) 6.8 (6.8) 11.6 7.3
Core net profit growth (0.7) 6.8 (6.8) 11.6 7.3

Profitability ratios (%)

EBITDA margin 17.1 16.7 15.6 17.0 16.6
EBIT margin 16.3 15.8 14.9 16.3 16.0
Pretax profit margin 17.0 16.8 15.9 17.3 16.9
Payout ratio 98.5 100.0 100.0 100.0 100.0

DuPont analysis
Net profit margin (%) 12.8 12.7 11.9 13.0 12.7
Revenue/Assets (x) 2.3 2.3 2.3 2.3 2.4
Assets/Equity (x) 1.3 1.3 1.3 1.3 1.3
ROAE (%) 37.1 39.0 36.2 40.1 41.5
ROAA (%) 29.6 30.2 27.4 30.3 31.3

Liquidity & Efficiency

Cash conversion cycle 84.5 69.8 64.0 63.6 60.7
Days receivable outstanding 12.6 12.0 11.9 11.7 11.3
Days inventory outstanding 90.1 73.6 67.4 67.2 64.0
Days payables outstanding 18.1 15.8 15.3 15.3 14.5
Dividend cover (x) 1.0 1.0 1.0 1.0 1.0
Current ratio (x) 5.3 4.3 4.1 4.2 4.0

Leverage & Expense Analysis

Asset/Liability (x) 4.8 4.1 4.1 4.2 3.9
Net gearing (%) (incl perps) net cash net cash net cash net cash net cash
Net gearing (%) (excl. perps) net cash net cash net cash net cash net cash
Net interest cover (x) na na na na na
Debt/EBITDA (x) 0.0 0.0 0.0 0.0 0.0
Capex/revenue (%) 0.9 1.3 1.4 1.2 1.0
Net debt/ (net cash) (7,501.7) (15,516.4) (13,884.5) (14,783.6) (13,949.5)
Source: Company; Maybank

February 7, 2020 6
HM Sampoerna

Research Offices
MACRO REGIONAL EQUITIES SINGAPORE THAILAND
Sadiq CURRIMBHOY Anand PATHMAKANTHAN CHUA Su Tye Maria LAPIZ Head of Institutional Research
Head of Regional Macro Research Head of Regional Equity Research (65) 6231 5842 chuasutye@maybank-ke.com.sg Dir (66) 2257 0250 | (66) 2658 6300 ext 1399
(65) 6231 5836 (603) 2297 8783 • REITs Maria.L@maybank-ke.co.th
sadiq@maybank-ke.com.sg anand.pathmakanthan@maybank-ib.com • Strategy • Consumer • Materials • Services
LAI Gene Lih, CFA
(65) 6231 5832 laigenelih@maybank-ke.com.sg Teerapol UDOMVEJ, CFA
ECONOMICS WONG Chew Hann, CA (66) 2658 6300 ext 1394
Head of ASEAN Equity Research • Technology • Healthcare
Suhaimi ILIAS teerapol.U@maybank-ke.co.th
(603) 2297 8686 Thilan WICKRAMASINGHE • Healthcare
Chief Economist wchewh@maybank-ib.com
Malaysia | Philippines | Global (65) 6231 5840 thilanw@maybank-ke.com.sg Jesada TECHAHUSDIN, CFA
(603) 2297 8682 • Banks • Consumer (66) 2658 6300 ext 1395
ONG Seng Yeow
suhaimi_ilias@maybank-ib.com jesada.t@maybank-ke.co.th
Research, Technology & Innovation TAN Chin Poh Head of Retail Research
(65) 6231 5928 chinpoh@maybank-ke.com.sg • Banking & Finance
CHUA Hak Bin (65) 6231 5839
Regional Thematic Macroeconomist ongsengyeow@maybank-ke.com.sg Kaushal LADHA, CFA
Eric ONG (66) 2658 6300 ext 1392
(65) 6231 5830
MALAYSIA (65) 6231 5924 ericong@maybank-ke.com.sg Kaushal.l@maybank-ke.co.th
chuahb@maybank-ke.com.sg
• Retail Research • Oil & Gas
LEE Ju Ye Anand PATHMAKANTHAN, Head of Research Ekachai TARAPORNTIP Head of Retail Research
(603) 2297 8783 Matthew SHIM
Singapore | Thailand (65) 6231 5929 (66) 2658 5000 ext 1530
(65) 6231 5844 anand.pathmakanthan@maybank-ib.com Ekachai.t@maybank-ke.co.th
• Strategy matthewshim@maybank-ke.com.sg
leejuye@maybank-ke.com.sg • Retail Research Surachai PRAMUALCHAROENKIT
Desmond CH’NG, BFP, FCA (66) 2658 5000 ext 1470
Linda LIU Kareen CHAN Surachai.p@maybank-ke.co.th
Singapore | Vietnam (603) 2297 8680
desmond.chng@maybank-ib.com (65) 6231 5926 kareenchan@maybank-ke.com.sg • Auto • Conmat • Contractor • Steel
(65) 6231 5847 • Retail Research
• Banking & Finance Suttatip PEERASUB
lindaliu@maybank-ke.com.sg
(66) 2658 5000 ext 1430
LIAW Thong Jung
INDIA suttatip.p@maybank-ke.co.th
Dr Zamros DZULKAFLI
(603) 2297 8688 tjliaw@maybank-ib.com Jigar SHAH Head of Research • Media • Commerce
(603) 2082 6818
zamros.d@maybank-ib.com • Oil & Gas Services- Regional Jaroonpan WATTANAWONG
(91) 22 4223 2632 jigar@maybank-ke.co.in
• Automotive (66) 2658 5000 ext 1404
• Strategy • Oil & Gas • Automobile • Cement
Ramesh LANKANATHAN jaroonpan.w@maybank-ke.co.th
(603) 2297 8685 ONG Chee Ting, CA • Transportation • Small cap
(603) 2297 8678 ct.ong@maybank-ib.com Neerav DALAL
ramesh@maybank-ib.com (91) 22 4223 2606 neerav@maybank-ke.co.in Thanatphat SUKSRICHAVALIT
• Plantations - Regional
• Software Technology • Telcos (66) 2658 5000 ext 1401
William POH thanaphat.s@maybank-ke.co.th
(603) 2297 8683 YIN Shao Yang, CPA
(603) 2297 8916 samuel.y@maybank-ib.com Kshitiz PRASAD • Media • Electronics
william.poh@maybank-ib.com
• Gaming – Regional • Media (91) 22 4223 2607 Wijit ARAYAPISIT
kshitiz@maybank-ke.co.in (66) 2658 5000 ext 1450
FX TAN Chi Wei, CFA
• Banks wijit.a@maybank-ke.co.th
Saktiandi SUPAAT (603) 2297 8690 chiwei.t@maybank-ib.com • Strategist
Head of FX Research • Power • Telcos Kritsapong PATAN
INDONESIA
(65) 6320 1379 (66) 2658 5000 ext 1310
saktiandi@maybank.com.sg WONG Wei Sum, CFA Isnaputra ISKANDAR Head of Research kritsapong.p@maybank-ke.co.th
(603) 2297 8679 weisum@maybank-ib.com (62) 21 8066 8680 • Chartist
Christopher WONG • Property isnaputra.iskandar@maybank-ke.co.id
(65) 6320 1347 • Strategy • Metals & Mining • Cement VIETNAM
wongkl@maybank.com.sg LEE Yen Ling • Autos • Consumer • Utility
(603) 2297 8691 lee.yl@maybank-ib.com LE Hong Lien, ACCA
TAN Yanxi • Glove • Ports • Shipping • Healthcare Rahmi MARINA Head of Institutional Research
(65) 6320 1378 • Petrochem (62) 21 8066 8689 (84 28) 44 555 888 ext 8181
tanyx@maybank.com.sg rahmi.marina@maybank-ke.co.id lien.le@maybank-kimeng.com.vn
Kevin WONG • Banking & Finance • Strategy • Consumer • Diversified
Fiona LIM (603) 2082 6824 kevin.wong@maybank-ib.com Aurellia SETIABUDI
(65) 6320 1374 • REITs • Consumer Discretionary • Technology (62) 21 8066 8691 LE Nguyen Nhat Chuyen
fionalim@maybank.com.sg aurellia.setiabudi@maybank-ke.co.id (84 28) 44 555 888 ext 8082
Jade TAM chuyen.le@maybank-kimeng.com.vn
• Property
STRATEGY (603) 2297 8687 jade.tam@maybank-ib.com • Oil & Gas
• Consumer Staples Arnanto JANURI
(62) 21 8066 8683 QUAN Trong Thanh
Willie CHAN
arnanto.januri @maybank-ke.co.id (84 28) 44 555 888 ext 8184
Regional TEE Sze Chiah Head of Retail Research
thanh.quan@maybank-kimeng.com.vn
(852) 2268 0631 (603) 2082 6858 szechiah.t@maybank-ib.com • Construction
• Banks
williechan@kimeng.com.hk
Nik Ihsan RAJA ABDULLAH, MSTA, CFTe PHILIPPINES NGUYEN Thi Sony Tra Mi
Anand PATHMAKANTHAN (603) 2297 8694 (84 28) 44 555 888 ext 8084
nikmohdihsan.ra@maybank-ib.com Katherine TAN mi.nguyen@maybank-kimeng.com.vn
ASEAN
• Chartist (63) 2 8849 8843 • Consumer
(603) 2297 8783
kat_tan@maybank-atrke.com
anand.pathmakanthan@maybank-ib.com
Amirah AZMI • Banks • Conglomerates • Ports Tyler Manh Dung Nguyen
(603) 2082 8769 amirah.azmi@maybank-ib.com (84 28) 44 555 888 ext 8180
FIXED INCOME Romel LIBO-ON dung.nguyen@maybank-kimeng.com.vn
• Retail Research
(63) 2 8849 8844 • Utilities
Winson PHOON, ACA
romel_libo-on@maybank-atrke.com
(65) 6812 8807 NGUYEN Thi Ngan Tuyen
• Property
winsonphoon@maybank-ke.com.sg Head of Retail Research
Kayzer LLANDA (84 28) 44 555 888 ext 8081
SE THO Mun Yi (63) 2 8849 8839 tuyen.nguyen@maybank-kimeng.com.vn
(603) 2074 7606 Kayzer_llanda@maybank-atrke.com • Food & Beverage • Oil & Gas • Banking
munyi.st@maybank-ib.com • Utilities
NGUYEN Thanh Lam
Fredrick De GUZMAN (84 28) 44 555 888 ext 8086
(63) 2 8849 8847 thanhlam.nguyen@maybank-kimeng.com.vn
fredrickdaniel.deguzman@maybank.com • Technical Analysis
• Consumer

February 7, 2020 7
HM Sampoerna

APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLAIMERS AND DISCLOSURES

DISCLAIMERS
This research report is prepared for general circulation and for information purposes only and under no circumstances should it be considered or intended as an offer to sell or a solicitation
of an offer to buy the securities referred to herein. Investors should note that values of such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Opinions
or recommendations contained herein are in form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different
methodologies and are purely based on price and volume-related information extracted from the relevant jurisdiction’s stock exchange in the equity analysis. Accordingly, investors’ returns
may be less than the original sum invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investment advice and does
not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read this report. Investors should therefore seek
financial, legal and other advice regarding the appropriateness of investing in any securities or the investment strategies discussed or recommended in this report.
The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank Investment Bank Berhad, its
subsidiary and affiliates (collectively, “MKE”) and consequently no representation is made as to the accuracy or completeness of this report by MKE and it should not be relied upon as such.
Accordingly, MKE and its officers, directors, associates, connected parties and/or employees (collectively, “Representatives” ) shall not be liable for any direct, indirect or consequential
losses or damages that may arise from the use or reliance of this report. Any information, opinions or recommendations contained herein are subject to change at any time, without prior
notice.
This report may contain forward looking statements which are often but not always identified by the use of words such as “anticipate”, “believe”, “estimate”, “intend”, “plan”, “expect”,
“forecast”, “predict” and “project” and statements that an event or result “may”, “will”, “can”, “should”, “could” or “might” occur or be achieved and other similar expressions. Such
forward looking statements are based on assumptions made and information currently available to us and are subject to certain risks and uncertainties that could cause the actual results to
differ materially from those expressed in any forward looking statements. Readers are cautioned not to place undue relevance on these forward-looking statements. MKE expressly disclaims
any obligation to update or revise any such forward looking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence of
unanticipated events.
MKE and its officers, directors and employees, including persons involved in the preparation or issuance of this report, may, to the extent permitted by law, from time to time participate or
invest in financing transactions with the issuer(s) of the securities mentioned in this report, perform services for or solicit business from such issuers, and/or have a position or holding, or
other material interest, or effect transactions, in such securities or options thereon, or other investments related thereto. In addition, it may make markets in the securities mentioned in
the material presented in this report. One or more directors, officers and/or employees of MKE may be a director of the issuers of the securities mentioned in this report to the extent
permitted by law.
This report is prepared for the use of MKE’s clients and may not be reproduced, altered in any way, transmitted to, copied or distributed to any other party in whole or in part in any form or
manner without the prior express written consent of MKE and MKE and its Representatives accepts no liability whatsoever for the actions of third parties in this respect.
This report is not directed to or intended for distribution to or use by any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where
such distribution, publication, availability or use would be contrary to law or regulation. This report is for distribution only under such circumstances as may be permitted by applicable law.
The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Without prejudice to the foregoing, the reader is to note that additional
disclaimers, warnings or qualifications may apply based on geographical location of the person or entity receiving this report.
Malaysia
Opinions or recommendations contained herein are in the form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations
apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia Securities Berhad in the equity analysis.
Singapore
This report has been produced as of the date hereof and the information herein may be subject to change. Maybank Kim Eng Research Pte. Ltd. (“Maybank KERPL”) in Singapore has no
obligation to update such information for any recipient. For distribution in Singapore, recipients of this report are to contact Maybank KERPL in Singapore in respect of any matters arising
from, or in connection with, this report. If the recipient of this report is not an accredited investor, expert investor or institutional investor (as defined under Section 4A of the Singapore
Securities and Futures Act), Maybank KERPL shall be legally liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law.
Thailand
Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of Maybank Kim Eng Securities (Thailand)
Public Company Limited. Maybank Kim Eng Securities (Thailand) Public Company Limited (“MBKET”) accepts no liability whatsoever for the actions of third parties in this respect.
Due to different characteristics, objectives and strategies of institutional and retail investors, the research reports of MBKET Institutional and Retail Research Department may differ in
either recommendation or target price, or both. MBKET Retail Research is intended for retail investors (http://kelive.maybank-ke.co.th) while Maybank Kim Eng Institutional Research is
intended only for institutional investors based outside Thailand only.
The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the Office of the Securities and
Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the market for Alternative Investment disclosed to the
public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an eva luation of operation and is not based on inside
information. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey may be changed after that date. MBKET does
not confirm nor certify the accuracy of such survey result.
The disclosure of the Anti-Corruption Progress Indicators of a listed company on the Stock Exchange of Thailand, which is assessed by Thaipat Institute, is made in order to comply with the
policy and sustainable development plan for the listed companies of the Office of the Securities and Exchange Commission. Thaipat Institute made this assessment based on the information
received from the listed company, as stipulated in the form for the assessment of Anti-corruption which refers to the Annual Registration Statement (Form 56-1), Annual Report (Form 56-2),
or other relevant documents or reports of such listed company. The assessment result is therefore made from the perspective of Thaipat Institute that is a third party. It is not an assessment
of operation and is not based on any inside information. Since this assessment is only the assessment result as of the date appearing in the assessment result, it may be changed after that
date or when there is any change to the relevant information. Nevertheless, MBKET does not confirm, verify, or certify the accuracy and completeness of the assessment result.
US
This third-party research report is distributed in the United States (“US”) to Major US Institutional Investors (as defined in Rule 15a-6 under the Securities Exchange Act of 1934, as amended)
only by Maybank Kim Eng Securities USA Inc (“Maybank KESUSA”), a broker-dealer registered in the US (registered under Section 15 of the Securities Exchange Act of 1934, as amended). All
responsibility for the distribution of this report by Maybank KESUSA in the US shall be borne by Maybank KESUSA. This report is not directed at you if MKE is prohibited or restricted by any
legislation or regulation in any jurisdiction from making it available to you. You should satisfy yourself before reading it that Maybank KESUSA is permitted to provide research material
concerning investments to you under relevant legislation and regulations. All U.S. persons receiving and/or accessing this report and wishing to effect transactions in any security mentioned
within must do so with: Maybank Kim Eng Securities USA Inc. 400 Park Avenue, 11th Floor, New York, New York 10022, 1-(212) 688-8886 and not with, the issuer of this report.

February 7, 2020 8
HM Sampoerna

UK
This document is being distributed by Maybank Kim Eng Securities (London) Ltd (“Maybank KESL”) which is authorized and regula ted, by the Financial Conduct Authority and is for
Informational Purposes only. This document is not intended for distribution to anyone defined as a Retail Client under the Financial Services and Markets Act 2000 within the UK. Any
inclusion of a third party link is for the recipients convenience only, and that the firm does not take any responsibility for its comments or accuracy, and that access to such links is at the
individuals own risk. Nothing in this report should be considered as constituting legal, accounting or tax advice, and that for accurate guidance recipients should consult with their own
independent tax advisers.
DISCLOSURES

Legal Entities Disclosures

Malaysia: This report is issued and distributed in Malaysia by Maybank Investment Bank Berhad (15938- H) which is a Participating Organization of Bursa Malaysia Berhad and a holder of
Capital Markets and Services License issued by the Securities Commission in Malaysia. Singapore: This report is distributed in Singapore by Maybank KERPL (Co. Reg No 198700034E) which is
regulated by the Monetary Authority of Singapore. Indonesia: PT Maybank Kim Eng Securities (“PTMKES”) (Reg. No. KEP-251/PM/1992) is a member of the Indonesia Stock Exchange and is
regulated by the Financial Services Authority (Indonesia). Thailand: MBKET (Reg. No.0107545000314) is a member of the Stock Exchange of Thailand and is regulated by the Ministry of
Finance and the Securities and Exchange Commission. Philippines: Maybank ATRKES (Reg. No.01-2004-00019) is a member of the Philippines Stock Exchange and is regulated by the Securities
and Exchange Commission. Vietnam: Maybank Kim Eng Securities Limited (License Number: 117/GP-UBCK) is licensed under the State Securities Commission of Vietnam. Hong Kong: KESHK
(Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: Kim Eng Securities India Private Limited (“KESI”) is a participant of the National Stock Exchange of
India Limited and the Bombay Stock Exchange and is regulated by Securities and Exchange Board of India (“SEBI”) (Reg. No. INZ000010538). KESI is also registered with SEBI as Category 1
Merchant Banker (Reg. No. INM 000011708) and as Research Analyst (Reg No: INH000000057) US: Maybank KESUSA is a member of/ and is authorized and regulated by the FINRA – Broker ID
27861. UK: Maybank KESL (Reg No 2377538) is authorized and regulated by the Financial Conduct Authority.

Disclosure of Interest
Malaysia: MKE and its Representatives may from time to time have positions or be materially interested in the securities referred to herein and may further act as market maker or may
have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investment banking services, advisory and other services for or relating to
those companies.

Singapore: As of 7 February 2020, Maybank KERPL and the covering analyst do not have any interest in any companies recommended in this research report.

Thailand: MBKET may have a business relationship with or may possibly be an issuer of derivative warrants on the securities /companies mentioned in the research report. Therefore,
Investors should exercise their own judgment before making any investment decisions. MBKET, its associates, directors, connected parties and/or employees may from time to time have
interests and/or underwriting commitments in the securities mentioned in this report.

Hong Kong: As of 7 February 2020, KESHK and the authoring analyst do not have any interest in any companies recommended in this research report.

India: As of 7 February 2020, and at the end of the month immediately preceding the date of publication of the research report, KESI, authoring analyst or their associate / relative does not
hold any financial interest or any actual or beneficial ownership in any shares or having any conflict of interest in the subject companies except as otherwise disclosed in the research
report.
In the past twelve months KESI and authoring analyst or their associate did not receive any compensation or other benefits from the subject companies or third party in connection with the
research report on any account what so ever except as otherwise disclosed in the research report.
MKE may have, within the last three years, served as manager or co-manager of a public offering of securities for, or currently may make a primary market in issues of, any or all of the
entities mentioned in this report or may be providing, or have provided within the previous 12 months, significant advice or investment services in relation to the investment concerned
or a related investment and may receive compensation for the services provided from the companies covered in this report.

OTHERS
Analyst Certification of Independence
The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of the research analyst’s
compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.
Reminder
Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable of understanding and
assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political factors (including, but not limited to, spot and
forward interest and exchange rates), time to maturity, market conditions and volatility and the credit quality of any issuer or reference issuer. Any investor interested in purchasing a
structured product should conduct its own analysis of the product and consult with its own professional advisers as to the risks involved in making such a purchase.
No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of MKE.

February 7, 2020 9
HM Sampoerna

Historical recommendations and target price: HM Sampoerna (HMSP IJ)

7 Aug 15 Feb 15 Jul 1 Nov 8 Nov

Hold : Rp4,000 Buy : Rp4,500 Hold : Rp3,300 Hold : Rp2,350 Buy : Rp2,350
4,000.0

3,500.0

3,000.0

2,500.0

2,000.0

1,500.0
Jul-18 Oct-18 Jan-19 Apr-19 Aug-19 Nov-19 Feb-20

HM Sampoerna

Definition of Ratings
Maybank Kim Eng Research uses the following rating system
BUY Return is expected to be above 10% in the next 12 months (including dividends)
HOLD Return is expected to be between 0% to 10% in the next 12 months (including dividends)
SELL Return is expected to be below 0% in the next 12 months (including dividends)
Applicability of Ratings
The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only
applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment
ratings as we do not actively follow developments in these companies.

February 7, 2020 10
HM Sampoerna
 Malaysia
Maybank Investment Bank Berhad
(A Participating Organisation of
Bursa Malaysia Securities Berhad)
33rd Floor, Menara Maybank,
100 Jalan Tun Perak,
50050 Kuala Lumpur
Tel: (603) 2059 1888;
Fax: (603) 2078 4194
Stockbroking Business:
Level 8, Tower C, Dataran Maybank,
No.1, Jalan Maarof
59000 Kuala Lumpur
Tel: (603) 2297 8888
Fax: (603) 2282 5136
 Philippines
Maybank ATR Kim Eng Securities Inc.
17/F, Tower One & Exchange Plaza
Ayala Triangle, Ayala Avenue
Makati City, Philippines 1200
Tel: (63) 2 8849 8888
Fax: (63) 2 8848 5738
 South Asia Sales Trading
Kevin Foy
Regional Head Sales Trading
kevinfoy@maybank-ke.com.sg
Tel: (65) 6636-3620
US Toll Free: 1-866-406-7447
Indonesia
Iwan Atmadjaja
iatmadjaja2@bloomberg.net
(62) 21 8066 8555
New York
James Lynch
jlynch@maybank-keusa.com
Tel: (212) 688 8886
Philippines
Keith Roy
keith_roy@maybank-atrke.com
Tel: (63) 2 848-5288
February 7, 2020
 Singapore
Maybank Kim Eng Securities Pte Ltd
Maybank Kim Eng Research Pte Ltd
50 North Canal Road
Singapore 059304
Tel: (65) 6336 9090
 Hong Kong
Kim Eng Securities (HK) Ltd
28/F, Lee Garden Three,
1 Sunning Road, Causeway Bay,
Hong Kong
Tel: (852) 2268 0800
Fax: (852) 2877 0104
 Thailand
Maybank Kim Eng Securities
(Thailand) Public Company Limited
999/9 The Offices at Central World,
20th - 21st Floor,
Rama 1 Road Pathumwan,
Bangkok 10330, Thailand
Tel: (66) 2 658 6817 (sales)
Tel: (66) 2 658 6801 (research)
 North Asia Sales Trading
Andrew Lee
andrewlee@kimeng.com.hk
Tel: (852) 2268 0283
US Toll Free: 1 877 837 7635
London
Greg Smith
gsmith@maybank-ke.co.uk
Tel: (44) 207-332-0221
India
Sanjay Makhija
sanjaymakhija@maybank-ke.co.in
Tel: (91)-22-6623-2629
 London
Maybank Kim Eng Securities
(London) Ltd
PNB House
77 Queen Victoria Street
London EC4V 4AY, UK
Tel: (44) 20 7332 0221
Fax: (44) 20 7332 0302
 Indonesia
PT Maybank Kim Eng Securities
Sentral Senayan III, 22nd Floor
Jl. Asia Afrika No. 8
Gelora Bung Karno, Senayan
Jakarta 10270, Indonesia
Tel: (62) 21 2557 1188
Fax: (62) 21 2557 1189
 Vietnam
Maybank Kim Eng Securities Limited
4A-15+16 Floor Vincom Center Dong
Khoi, 72 Le Thanh Ton St. District 1
Ho Chi Minh City, Vietnam
Tel : (84) 844 555 888
Fax : (84) 8 38 271 030
www.maybank-ke.com | www.maybank-keresearch.com
 New York
Maybank Kim Eng Securities USA
Inc
400 Park Avenue, 11th Floor
New York, New York 10022,
U.S.A.
Tel: (212) 688 8886
Fax: (212) 688 3500
 India
Kim Eng Securities India Pvt Ltd
1101, 11th floor, A Wing, Kanakia
Wall Street, Chakala, Andheri -
Kurla Road, Andheri East,
Mumbai City - 400 093, India
Tel: (91) 22 6623 2600
Fax: (91) 22 6623 2604
 Saudi Arabia
In association with
Anfaal Capital
Ground Floor, KANOO Building
No.1 - Al-Faisaliyah,Madina Road,
P.O.Box 126575 Jeddah 21352
Kingdom of Saudi Arabia
Tel: (966) 920023423
11