CBP Division as the Pillar of INDF’s Stability
The Consumer Branded Products (CBP) division remains to be INDF’s backbone because this division contributes 52% to INDF’s total sales. The CBP division dominates virtually 72%-75% of Indonesia-based instant noodles’ market shares and continuously innovates new products, e.g. the launch of Indomie Mi Keriting Goreng Rasa Telur Asin expected to accelerate its future growth. Furthermore, ICBP carried out the increment of 10% in production capacities of instant noodles distributed to Greater Jakarta; accordingly, the total national capacities reach 18 billion packages per year. Overseeing ICBP’s market share dominance, we estimate that the CBP division likely maintains a stable growth of 5-6% per year from 2018 to 2020 with the net profit margin at around 12%.

Awaiting Surprises from Flour Division and Agribusiness Division
We estimate that the flour division and the agribusiness division will give surprises of rosier sales. The cost-plus sales strategy and the recovery in prices of milled wheat flour since the early of 2018 are the growth pillars for the flour division. The flour division posted the increment of 6% and 12% in 1Q18’s sales and 2Q18’s sales, respectively. Such rosier sales were in stark contrast to the decline of 5% and 6% in 1Q17’s sales and 2Q17’s sales.

The Agribusiness division is suffering from waning sales because of sluggish CPO prices. The further implementation and improvement in the biodiesel mandatory are rebound drivers for CPO prices because the policy inevitably raises the demand for CPO.

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