ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

In Equity Sales and Research for more than 25 years covering Asian markets. Possesses in-depth knowledge of a wide range of companies, economies, and markets in Asia. Over his career, he has specialised in HK/China and ASEAN markets at various different Investment Banks, most recently heading equities in Indonesia for Bank of America Merrill Lynch in Jakarta for more than three years. Whilst in Jakarta, he produced a well-read daily and weekly product on the Indonesian market, which included company visits, as well as political, economic and sector commentary. A former racing skier, who enjoys ultra-marathons and surfing in his spare time.

ASEAN Insight Provider

The Week that Was in ASEAN@Smartkama - Kalbe Spin-Off, SingTel's Deep Value, and Thailand's Gamers

Kalbe Farma (KLBF IJ) - Vaccinated for Future Growth

Kalbe Farma (KLBF IJ) - An Increasingly Healthy Blend

Kalbe Farma (KLBF IJ) - Still a Healthy Choice

Kalbe Farma (KLBF IJ) - Over the Hump but in the Trough

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. 

Insights across South East Asia

Equity Bottom-Up

It was reported last week the South East Asia's largest pharmaceuticals company <a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> is looking to spin-off its Nutritionals business at a total value of US$500m. This would be Indonesia's largest IPO of 2020. We take a closer look at this segment and whether a separate listing would add value.
As at June, 2020 Nutritionals made up 28% of the company's revenues and around 40% of EBITDA, as its share is boosted by the much lower margin distribution business which is 32% of sales.
The division covers a wide range of products including powdered milk products covering all age ranges from expectant mother to babies, kids, and adults under a number different brands, as well as producing supplements for diabetics to stabilise blood sugar, a cholesterol a sliming milk, and a weight-loss product called Slim &amp; Fit. 
<a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> also sells the popular Fit Bar and Fit Chips snacks under this division, which are very accessible and popular snacks found across modern trade and has the license to sell Blackmores Vitamins in Indonesia, where it has a leading market share.
Though there are scant details available on this potential spin-off, we attempt to ascertain whether this will be value accretive for shareholders of <a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ).</a>
The company distributes its nutritional products through its extensive network under <a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)'</a>s distribution subsidiary<a href="https://www.smartkarma.com/entities/enseval-putera-megatrading-tbk-pt" target="_blank" data-smartkarma-citation="entities:12291:1" rel="noopener"> Enseval Putera Megatrading (EPMT IJ),</a> which cover the whole of Indonesia.
<div class="content-highlight">
We await further details on this but continue to see <a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> as a key defensive holding in Indonesia, which will benefit from more health-conscious Indonesians as well as a rebound in its pharmaceuticals business as PSBB measures are relaxed. It is also involved in testing for COVID-19 and in the development of a vaccine with Korean company Genexine, which could provide further catalysts. <a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a>  is trading at a slight discount to its 5-year average forward PER of 27.5x currently on 26.4x but with a number of potential catalysts ahead.
</div>

It was reported last week the South East Asia's largest pharmaceuticals company Kalbe Farma (KLBF IJ) is looking to spin-off its Nutritionals business at a total value of US$500m. This would be Indonesia's largest IPO of 2020. We take a closer look at this segment and whether a separate listing would add value.
As at June, 2020 Nutritionals made up 28% of the company's revenues and around 40% of EBITDA, as its share is boosted by the much lower margin distribution business which is 32% of sales.
The division covers a wide range of products including powdered milk products covering all age ranges from expectant mother to babies, kids, and adults under a number different brands, as well as producing supplements for diabetics to stabilise blood sugar, a cholesterol a sliming milk, and a weight-loss product called Slim &amp; Fit. 
Kalbe Farma (KLBF IJ) also sells the popular Fit Bar and Fit Chips snacks under this division, which are very accessible and popular snacks found across modern trade and has the license to sell Blackmores Vitamins in Indonesia, where it has a leading market share.
Though there are scant details available on this potential spin-off, we attempt to ascertain whether this will be value accretive for shareholders of Kalbe Farma (KLBF IJ).
The company distributes its nutritional products through its extensive network under Kalbe Farma (KLBF IJ)'s distribution subsidiary Enseval Putera Megatrading (EPMT IJ), which cover the whole of Indonesia.

We await further details on this but continue to see Kalbe Farma (KLBF IJ) as a key defensive holding in Indonesia, which will benefit from more health-conscious Indonesians as well as a rebound in its pharmaceuticals business as PSBB measures are relaxed. It is also involved in testing for COVID-19 and in the development of a vaccine with Korean company Genexine, which could provide further catalysts. Kalbe Farma (KLBF IJ)  is trading at a slight discount to its 5-year average forward PER of 27.5x currently on 26.4x but with a number of potential catalysts ahead.


Kalbe Farma (KLBF IJ) - A Nutritional Spin-Off?