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Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

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Equity Bottom-Up

Ultrajaya Milk Industry & Trading Co. / Equity Bottom-Up

Ultrajaya Milk Industry & Trading Co. (ULTJ IJ)

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<p><a href="https://www.smartkarma.com/entities/ultrajaya-milk-industry-trading-company" target="_blank" data-smartkarma-citation="entities:13892:1" rel="noopener">Ultrajaya Milk Industry &amp; Trading (ULTJ IJ)</a> remains a high-quality proxy to the rising demand for dairy products in Indonesia, with a nearly 40% market share of the UHT market through its Ultra Milk brand.  The company is also the number one producer in ready to drink (RTD) tea drinks in cartons where it has a 77% market share with various different carton packaging options. </p>
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<p><a href="https://www.smartkarma.com/entities/ultrajaya-milk-industry-trading-company" target="_blank" data-smartkarma-citation="entities:13892:1" rel="noopener">Ultrajaya Milk Industry &amp; Trading (ULTJ IJ)</a> also has various tolling agreements for the production of powdered milk and UHT drinks, with customers such as <a href="https://www.smartkarma.com/entities/unilever-indonesia-tbk-pt" target="_blank" data-smartkarma-citation="entities:231:1" rel="noopener">Unilever Indonesia (UNVR IJ)</a>.</p>
<p>The industry fundamentals in Indonesia are strong with relatively low rates of consumption per capita versus other South-East Asian Countries. has a low per capita consumption of milk versus its South-East Asian neighbours</p>
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<p><a href="https://www.smartkarma.com/entities/ultrajaya-milk-industry-trading-company" target="_blank" data-smartkarma-citation="entities:13892:1" rel="noopener">Ultrajaya Milk Industry &amp; Trading (ULTJ IJ)</a> continues to source more than half its powdered milk requirements from overseas in the form of powdered skimmed milk and whole milk but is increasing sourcing its requirements locally together with building up its own dairy herds</p>
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<p>The company continued to face some pressure from COVID-19 restrictions in 1H2021 but the more positive trend that started in 1Q2021 continued into 2Q2021, especially for its core flavoured milk and carton tea products.</p>
<p>From a distribution perspective, the company continues to push more into the under-penetrated areas of Kalimantan and Sumatra. It is also increasingly helping distributors to secure financing and achieving IT connectivity with all distributors. </p>
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<section class="figure"><a href="https://www.smartkarma.com/entities/ultrajaya-milk-industry-trading-company" target="_blank" data-smartkarma-citation="entities:13892:1" rel="noopener">Ultrajaya Milk Industry &amp; Trading (ULTJ IJ)</a> is also continuing to focus on developing new products and has recently signed a JV with Ito En. It will also consider launching yoghurt drinks and pasteurised milk products, when the time is right, as we move into a post-COVID world. The company remains one of Indonesia's least appreciated consumer staple players, with super-strong brands and a good long term growth track record as well as good governance. </section>
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Ultrajaya Milk Industry &amp; Trading (ULTJ IJ) remains a high-quality proxy to the rising demand for dairy products in Indonesia, with a nearly 40% market share of the UHT market through its Ultra Milk brand.  The company is also the number one producer in ready to drink (RTD) tea drinks in cartons where it has a 77% market share with various different carton packaging options. 

Ultrajaya Milk Industry &amp; Trading (ULTJ IJ) also has various tolling agreements for the production of powdered milk and UHT drinks, with customers such as Unilever Indonesia (UNVR IJ).
The industry fundamentals in Indonesia are strong with relatively low rates of consumption per capita versus other South-East Asian Countries. has a low per capita consumption of milk versus its South-East Asian neighbours

Ultrajaya Milk Industry &amp; Trading (ULTJ IJ) continues to source more than half its powdered milk requirements from overseas in the form of powdered skimmed milk and whole milk but is increasing sourcing its requirements locally together with building up its own dairy herds



The company continued to face some pressure from COVID-19 restrictions in 1H2021 but the more positive trend that started in 1Q2021 continued into 2Q2021, especially for its core flavoured milk and carton tea products.
From a distribution perspective, the company continues to push more into the under-penetrated areas of Kalimantan and Sumatra. It is also increasingly helping distributors to secure financing and achieving IT connectivity with all distributors. 


Ultrajaya Milk Industry &amp; Trading (ULTJ IJ) is also continuing to focus on developing new products and has recently signed a JV with Ito En. It will also consider launching yoghurt drinks and pasteurised milk products, when the time is right, as we move into a post-COVID world. The company remains one of Indonesia's least appreciated consumer staple players, with super-strong brands and a good long term growth track record as well as good governance. 












Ultrajaya Milk Industry & Trading (ULTJ IJ) - Growth in a Small Carton

Research from Asian Century Stocks, Asian Century Stocks

Michael Fritzell

Research from Asian Century Stocks

Providing financial journalism in the Asia-Pacific

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Asian Century Stocks is a newsletter providing financial journalism for companies and stocks in the Asia-Pacific. 
The Asian Century Stocks logotype “百” stands for “one hundred” or a “century”. The economic centre of gravity is moving towards Asia. Yet most global investors are missing out.

<h2>Deep-dive: Ultrajaya Milk</h2>
<p>Ultrajaya Milk (ULTJ IJ) is the leading dairy company in Indonesia. Its most popular product “Ultra Milk” has a market share of roughly 40% and dominates the mass market.</p>
<p>The company focuses on “UHT milk”. Such milk has been treated with ultra-high temperatures and stored in aseptic packaging, giving it a shelf life of 6-9 months at normal room temperatures. This makes UHT milk highly convenient. Especially in Indonesia given that the climate is tropical and the cold chain infrastructure is undeveloped.</p>

Deep-dive: Ultrajaya Milk
Ultrajaya Milk (ULTJ IJ) is the leading dairy company in Indonesia. Its most popular product “Ultra Milk” has a market share of roughly 40% and dominates the mass market.
The company focuses on “UHT milk”. Such milk has been treated with ultra-high temperatures and stored in aseptic packaging, giving it a shelf life of 6-9 months at normal room temperatures. This makes UHT milk highly convenient. Especially in Indonesia given that the climate is tropical and the cold chain infrastructure is undeveloped.

<p>Indonesia’s biggest milk company <a href="https://www.smartkarma.com/entities/ultrajaya-milk-industry-trading-company" target="_blank" data-smartkarma-citation="entities:13892:1" rel="noopener">Ultrajaya Milk Industry &amp; Trading (ULTJ IJ)</a> recently announced its 3Q2020 results, which saw a resilient performance from its dairy business and less so from packet tea. We caught up with management to garner a bit more colour on the simmering recovery that is taking place. </p>
<p>In the dairy division white milk in larger packet sizes has been doing especially well, given the large portion of the population working and schooling from home. </p>
<p>Smaller packet flavoured milks and packet tea under the Teh Sosroh brand continue to be under pressure given these are often picked up on the move but we expect a decent recovery as the economy opens up. </p>
<p><a href="https://www.smartkarma.com/entities/ultrajaya-milk-ind-trading" target="_blank" data-smartkarma-citation="entities:13892:1" rel="noopener">Ultrajaya Milk Ind &amp; Trading (ULTJ IJ)</a> is likely to see a marginally slower growth performance this year but a continued rebound in earnings should be expected in 4Q2020, driven by a move to a "new normal" in Indonesia and a gradual opening up of the economy. </p>
<p>The company has opened a new Tetrapak line for larger packets to satisfy the growing demand for family packs. It is also investing in two large-sized dairy farms to ensure local supply.</p>
<p>Next year the company will invest in a new production and distribution centre closer to Jakarta, which will diversify its operations geographically. It has successfully secured IDR3tn in medium-term notes to finance its expansion. </p>
<p>Valuations remain attractive with the company trading on 15.5x FY21E PER versus its peer group average of 26x forward PER. <a href="https://www.smartkarma.com/entities/ultrajaya-milk-ind-trading" target="_blank" data-smartkarma-citation="entities:13892:1" rel="noopener">Ultrajaya Milk Ind &amp; Trading (ULTJ IJ)</a> remains a core staple holding in Indonesia and one of our top long-term consumer picks. </p>

Indonesia’s biggest milk company Ultrajaya Milk Industry &amp; Trading (ULTJ IJ) recently announced its 3Q2020 results, which saw a resilient performance from its dairy business and less so from packet tea. We caught up with management to garner a bit more colour on the simmering recovery that is taking place. 
In the dairy division white milk in larger packet sizes has been doing especially well, given the large portion of the population working and schooling from home. 
Smaller packet flavoured milks and packet tea under the Teh Sosroh brand continue to be under pressure given these are often picked up on the move but we expect a decent recovery as the economy opens up. 
Ultrajaya Milk Ind &amp; Trading (ULTJ IJ) is likely to see a marginally slower growth performance this year but a continued rebound in earnings should be expected in 4Q2020, driven by a move to a "new normal" in Indonesia and a gradual opening up of the economy. 
The company has opened a new Tetrapak line for larger packets to satisfy the growing demand for family packs. It is also investing in two large-sized dairy farms to ensure local supply.
Next year the company will invest in a new production and distribution centre closer to Jakarta, which will diversify its operations geographically. It has successfully secured IDR3tn in medium-term notes to finance its expansion. 
Valuations remain attractive with the company trading on 15.5x FY21E PER versus its peer group average of 26x forward PER. Ultrajaya Milk Ind &amp; Trading (ULTJ IJ) remains a core staple holding in Indonesia and one of our top long-term consumer picks. 

Ultrajaya Milk Industry & Trading (ULTJ IJ) - Simmering Recovery

<p><a href="https://www.smartkarma.com/entities/ultrajaya-milk-ind-trading" target="_blank" data-smartkarma-citation="entities:13892:1" rel="noopener">Ultrajaya Milk Ind &amp; Trading (ULTJ IJ)</a> saw a more pronounced impact from COVID-19 in 2Q2020, with a decline in growth for UHT milk with UHT white milk seeing better performance than flavoured products. This can be attributed to people working and breakfasting from home with PSBB measures in place, which also drove higher demand for larger size packets.</p>
<p><a href="https://www.smartkarma.com/entities/ultrajaya-milk-ind-trading" target="_blank" data-smartkarma-citation="entities:13892:1" rel="noopener">Ultrajaya Milk Ind &amp; Trading (ULTJ IJ)</a> did not see the usual benefits this year from Lebaran with packaged tea hit particularly hard, given far fewer people travelling due to the Mudik ban (return to home village). Normally Teh Kotak is a popular drink to pick up for long journeys. </p>
<p>July saw a slight pick-up in milk sales with some relaxation of PSBB measures from mid-June but it is too soon to read the performance for August. We would suggest a continuing rebound in sales of flavoured milk, as the population start to become more mobile again.</p>
<p>We also expect a gradual pick up in sales of Teh Kotak packet tea sales as employees return to working from the office again, albeit at a reduced intensity to start with.</p>
<p>Increased capacity for large size packets will also help to drive UHT white and flavoured milk growth, given greater demand due to WFH and schooling from home, especially for breakfasting.  </p>
<p><a href="https://www.smartkarma.com/entities/ultrajaya-milk-ind-trading" target="_blank" data-smartkarma-citation="entities:13892:1" rel="noopener">Ultrajaya Milk Ind &amp; Trading (ULTJ IJ)</a> is likely to see a marginally slower growth performance this year but a rebound in earnings should be expected in 2H2020, driven by a move to a "new normal" in Indonesia and a gradual opening up of the economy. It is unlikely that it will adjust prices higher in September this year, which may slow growth prospects slightly. Valuations remain attractive with the company trading on 16.4x FY21E PER versus its peer group average of 26x forward PER. <a href="https://www.smartkarma.com/entities/ultrajaya-milk-ind-trading" target="_blank" data-smartkarma-citation="entities:13892:1" rel="noopener">Ultrajaya Milk Ind &amp; Trading (ULTJ IJ)</a> remains a core staple holding in Indonesia. </p>

Ultrajaya Milk Ind &amp; Trading (ULTJ IJ) saw a more pronounced impact from COVID-19 in 2Q2020, with a decline in growth for UHT milk with UHT white milk seeing better performance than flavoured products. This can be attributed to people working and breakfasting from home with PSBB measures in place, which also drove higher demand for larger size packets.
Ultrajaya Milk Ind &amp; Trading (ULTJ IJ) did not see the usual benefits this year from Lebaran with packaged tea hit particularly hard, given far fewer people travelling due to the Mudik ban (return to home village). Normally Teh Kotak is a popular drink to pick up for long journeys. 
July saw a slight pick-up in milk sales with some relaxation of PSBB measures from mid-June but it is too soon to read the performance for August. We would suggest a continuing rebound in sales of flavoured milk, as the population start to become more mobile again.
We also expect a gradual pick up in sales of Teh Kotak packet tea sales as employees return to working from the office again, albeit at a reduced intensity to start with.
Increased capacity for large size packets will also help to drive UHT white and flavoured milk growth, given greater demand due to WFH and schooling from home, especially for breakfasting.  
Ultrajaya Milk Ind &amp; Trading (ULTJ IJ) is likely to see a marginally slower growth performance this year but a rebound in earnings should be expected in 2H2020, driven by a move to a "new normal" in Indonesia and a gradual opening up of the economy. It is unlikely that it will adjust prices higher in September this year, which may slow growth prospects slightly. Valuations remain attractive with the company trading on 16.4x FY21E PER versus its peer group average of 26x forward PER. Ultrajaya Milk Ind &amp; Trading (ULTJ IJ) remains a core staple holding in Indonesia. 

Ultrajaya Milk Ind & Trading (ULTJ IJ) - A Wholesome Performance

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<p>Based up in the cooler climes of Bandung, <a href="https://www.smartkarma.com/entities/ultrajaya-milk-ind-trading" target="_blank" data-smartkarma-citation="entities:13892:1" rel="noopener">Ultrajaya Milk Ind &amp; Trading (ULTJ IJ)</a> is one of Indonesia's hidden GEMs, with a 40% share of the liquid milk market and 70% chunk of the RTD carton tea market in Indonesia. It has no broker coverage, having a market cap of US$1bn and despite being acknowledged as one of Indonesia's best quality consumer staple companies catering to an industry with very low rates of penetration in the country. </p>
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<p><a href="https://www.smartkarma.com/entities/ultrajaya-milk-ind-trading" target="_blank" data-smartkarma-citation="entities:13892:1" rel="noopener">Ultrajaya Milk Ind &amp; Trading (ULTJ IJ)</a> should prove relatively resilient in the current COVID-19 environment, given the fact that milk is a staple and regarded as a healthy product. Its teas are readily available across modern and general trade catering for all levels of society. </p>
<p>The company imports milk powder so there is some risk to margins from IDR weakness, given that the currency has depreciated by 15% so far this year. There is also a potential supply chain disruption from COVID-19 from Australia and New Zealand but this has not happened as yet. </p>
<p>A second more recent conversation with management indicated the 1Q2020 continued to see decent performance including March but April has been more impacted given social distancing measures and reduced opening for some retailers. Meeting original guidance of double-digit for 2020 will be a stretch.</p>
<p>Having said the above, <a href="https://www.smartkarma.com/entities/ultrajaya-milk-ind-trading" target="_blank" data-smartkarma-citation="entities:13892:1" rel="noopener">Ultrajaya Milk Ind &amp; Trading (ULTJ IJ)</a> is a high-quality defensive staple with a long-term track record. This year will be tough but even if we assume no growth, the company is not expensive on 15.6x FY20E PER. Assuming a +10% recovery in 2021, it trades in 14.2x FY21E, which looks reasonable for such a high-quality consumer staple company. The company is relatively illiquid despite having a 42% free-float, so is more suitable for investors with a long-term investment horizon seeking to potentially purchase a block. </p>


Based up in the cooler climes of Bandung, Ultrajaya Milk Ind &amp; Trading (ULTJ IJ) is one of Indonesia's hidden GEMs, with a 40% share of the liquid milk market and 70% chunk of the RTD carton tea market in Indonesia. It has no broker coverage, having a market cap of US$1bn and despite being acknowledged as one of Indonesia's best quality consumer staple companies catering to an industry with very low rates of penetration in the country. 

Ultrajaya Milk Ind &amp; Trading (ULTJ IJ) should prove relatively resilient in the current COVID-19 environment, given the fact that milk is a staple and regarded as a healthy product. Its teas are readily available across modern and general trade catering for all levels of society. 
The company imports milk powder so there is some risk to margins from IDR weakness, given that the currency has depreciated by 15% so far this year. There is also a potential supply chain disruption from COVID-19 from Australia and New Zealand but this has not happened as yet. 
A second more recent conversation with management indicated the 1Q2020 continued to see decent performance including March but April has been more impacted given social distancing measures and reduced opening for some retailers. Meeting original guidance of double-digit for 2020 will be a stretch.
Having said the above, Ultrajaya Milk Ind &amp; Trading (ULTJ IJ) is a high-quality defensive staple with a long-term track record. This year will be tough but even if we assume no growth, the company is not expensive on 15.6x FY20E PER. Assuming a +10% recovery in 2021, it trades in 14.2x FY21E, which looks reasonable for such a high-quality consumer staple company. The company is relatively illiquid despite having a 42% free-float, so is more suitable for investors with a long-term investment horizon seeking to potentially purchase a block. 

Ultrajaya Milk Ind & Trading (ULTJ IJ) - The Dairy King of Indonesia

Indonesia

PT Ultrajaya Milk Industry & Trading Co. Tbk is a leading Indonesian producer of aseptic dairy products, beverages, and healthy drink products using Ultra High Temperature (UHT) technology and aseptic packaging. The company offers a wide range of products including milk (e.g., Ultra Milk), tea (e.g., Teh Kotak), and traditional drinks (e.g., Sari Kacang Ijo). Its headquarters are located in Bandung, Indonesia, and the company was founded in 1971.

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Ultrajaya Milk Industry & Trading Co. (ULTJ IJ)

Ultrajaya Milk Industry & Trading (ULTJ IJ) - Growth in a Small Carton

Ultrajaya remains one of Indonesia's least appreciated consumer staple players, with super-strong brands and a good long term growth track record...

Angus Mackintosh

Deep-Dive: Ultrajaya Milk (ULTJ IJ)

Ultrajaya Milk (ULTJ IJ) is the leading dairy company in Indonesia. Its most popular product “Ultra Milk” has a market share of roughly 40% and...

Asian Century Stocks

Ultrajaya Milk Industry & Trading (ULTJ IJ) - Simmering Recovery

Ultrajaya Milk Ind & Trading (ULTJ IJ) is the leading dairy company in Indonesia, dominating the UHT market. It continues to expand capacity and...

Angus Mackintosh

Ultrajaya Milk Ind & Trading (ULTJ IJ) - A Wholesome Performance

Ultrajaya Milk Ind Trading (ULTJ IJ) saw a more pronounced impact from COVID-19 in 2Q2020 than expected...

Angus Mackintosh

Ultrajaya Milk Ind & Trading (ULTJ IJ) - The Dairy King of Indonesia

Based up in the cooler climes of Bandung, Ultrajaya Milk Ind & Trading (ULTJ IJ) is one of Indonesia's hidden GEMs, with a 40% share of the...

Angus Mackintosh

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