DOCSLIB.ORG

In Asia Copyright © First Pacific Company Limited 26 June 2020

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
In Asia Copyright © First Pacific Company Limited 26 June 2020 Proposed Acquisition of Pinehill Company by Indofood CBP, A Subsidiary of Indofood HKEx: 00142 Creating ADR: FPAFY long-term value www.firstpacific.com in Asia Copyright © First Pacific Company Limited 26 June 2020. All rights reserved. Ownership Structure of Pinehill Company Argyle Street Management Limited Independent Third Relative of Anthoni Salim (Hong Kong-based asset manager, Parties Mr. Salim Beneficial Owner of Steele Lake) 49% 42.7% 8.3% 100% Pinehill Corpora Limited Steele Lake Limited (Affiliated) Seller (Non-Affiliated) Seller 51% 49% Pinehill Company Limited (Target Company, “Pinehill Group”) 59% 59% 59% 100% Salim Wazaran Group Limited Salim Wazaran Gida Sanayi Pinehill Arabia Food Limited Platinum Stream Profits “SAWAZ” (Egypt, Kenya, ve Yatirim Anonim Sirketi Serbia, Morocco) “PAFL” (Saudi Arabia) Limited 80% 49% Adkoturk Gida Sanayi ve DUFIL Prima Plc “DUFIL” Ticaret Limited Sirketi (Nigeria, Ghana) “Adkoturk” (Turkey) The four main Pinehill Group noodle makers. 2 Note: FPC Chairman A. Salim has a 25% economic interest in Pinehill. Pinehill Group Brings Continental Scale Four Companies In Eight Markets Serving 550 mln People DUFIL Pinehill Arabia Food (PAFL) Production2.8 from:x 4.9 1995 Production2.8 from:x 4.9 1995 2019 Sales: 4,062 mln 2019 Sales: 1,779 mln Population:13.4 x 5.0237 mln Population:19.2 x 5.035 mln SAWAZ Adkoturk Home marKets Production4.2 from:x 4.9 2010 Production2.8 from:x 4.9 2015 Neighboring marKets 2019 Sales: 1,550 mln 2019 Sales: 211 mln Population:13.4 x 8.2195 mln Population:19.2 x 8.284 mln Export markets bring total population to 885 million potential consumers Note: Sales are in units of 70g equivalent pacKs while “production from” refers to first factory operation. Sources: Company data, International Monetary Fund. 3 A Rare & Compelling Opportunity o Pinehill acquisition seen as earnings and value enhancing from the first year after financing costs o Indonesian independent valuer KJPP concluded that the acquisition would increase ICBP’s revenue and net profit up to 20% per year on average o The profit guarantee by the Sellers would have raised the pro forma recurring profit of the enlarged First Pacific Group to US$313.5 million vs. US$290.0 million in 2019, according to the Pinehill transaction circular o With an average consumption of instant noodles per capita that is still very low, the rapid growth in Pinehill’s markets is expected to continue in the foreseeable future. Thus, the acquisition of the Pinehill Group is expected to contribute to the future growth of ICBP and, indirectly, First Pacific o The acquisition represents a “turn-key” entry into fast-growing markets with dominant market share in every case, nearly quadrupling ICBP’s customer base o ICBP would become a global company with a diversified geography o The transaction would be in line with ICBP’s current business and its core Indomie brand 4 Integration Is Already Deep o ICBP's provision of technical services in connection with the instant noodles manufacturing operation ensures that equipment and machinery used in instant noodle production at Pinehill factories are sourced from the same suppliers as the equipment and machinery used at ICBP’s 18 noodle plants in Indonesia and Malaysia o Procedures and policies are modelled on those at ICBP, to ensure good manufacturing processes of the Pinehill Group and consistency for the Indomie brand o ICBP's technical services to Pinehill gives ICBP an intimate knowledge of Pinehill’s operations and confidence that integration with ICBP poses little risk o Following the acquisition of Pinehill, ICBP plans to further deepen integration of Pinehill into ICBP’s operational and financial management with cost savings and further synergies to follow o Pinehill distribution networks are ready to take on additional ICBP products, all of which are Halal, meeting the needs of 885 million new consumers o ICBP supplies flavorings and packaging to Pinehill, giving ICBP deep understanding of Pinehill’s markets and makes ICBP well placed to drive expansion into new flavors and product categories, and into new demographic and geographic markets 5 Transaction Valuation o Valuation of US$2.998 billion at control premium P/E multiple of 23x o The sale terms of the transaction were established by ICBP on an arms-length basis using P/E multiples of similar companies in similar food businesses in similar markets (six in Middle East/Africa and five in Southeast Asia), taking into account the control premium o Somerley Capital, the Independent Financial Advisor to FPC independent shareholders and First Pacific’s Independent Board Committee, considers this valuation as “fair and reasonable” following comparison with 10 other listed companies that derive at least half their revenues from instant noodles (see next slide) o The IFA analysis concluded that the 23x P/E multiple for the valuation of Pinehill is lower than the average P/E ratio of the 10 compared noodle makers (26.23x) o Indonesian independent valuer KJPP Rengganis, Hamid & Rekan used the discounted cash flow method for valuing Pinehill at US$2.863 billion as of 31 December 2019 and concluded that the proposed acquisition is “fair” o Deutsche Bank AG Hong Kong Branch prepared a valuation analysis using discounted cash flow analysis, comparable companies’ trading valuations and precedent comparable transactions and concluded that the purchase consideration is “fair and reasonable” from a financial point of view as of 18 May 2020 (slide 7) Note: See https://www.indofoodcbp.com/uploads/shareholder/Info%20Memo%20Eng%20Complete%20(Execution).pdf for ICBP’s information memorandum to shareholders relating to this transaction. First Pacific’s transaction circular is at https://www.firstpacific.com/media/normal/16337_2020062200359.pdf. 6 IFA Valuation vs. Other Noodle Makers (USD mln4) Company Name Ticker Market Cap1 Net Profit2 P/E Ratio2 Toyo Suisan Kaisha Ltd. TYO: 2875 6,010 218 27.60 Nissin Foods Holdings Co. Ltd. TYO: 2897 9,126 273 33.42 NongShim Co. Ltd. KRX: 004370 1,880 59 32.13 Samyang Foods Co. Ltd. KRX: 003230 851 49 17.33 Nestlé Nigeria PLC3 LAG: NESTLE 2,242 118 18.99 Flour Mills of Nigeria PLC3 LAG: FLOURMILL 216 11 20.36 Nissin Foods Company Limited 1475.HK 851 32 26.46 Thai President Foods Public Company Limited BKK: TFMAMA 2,101 126 16.64 PT Indofood CBP Sukses Makmur Tbk. IDX: ICBP 7,455 360 20.71 Nestlé (Malaysia) Berhad3 KLSE: 4707 7,639 157 48.61 Notes: Average 26.23 1) The market capitalization of the Comparable Companies is calculated based on their respective closing price per share and Median 23.58 number of issued shares as at the Latest Practicable Date. 2) P/E Ratios of the Comparable Companies are calculated based on the profit attributable to owners of the relevant Maximum 48.61 Comparable Companies as published in their respective latest financial reports and the respective market capitalization as Minimum 16.64 at the Latest Practicable Date. 3) Sales of instant noodles products were not separately disclosed in the respective annual reports however, were grouped under a segment which represented over 50% of their respective total revenue for the year. As such, for prudent sake, we have included these companies in our analysis. 4) The figures above denote the US$ equivalent amounts as translated from their original currencies. Source: Letter from the Independent Financial Advisor, pp. 70-1 of transaction circular. 7 Deutsche Bank Valuation for ICBP Deutsche Bank is of the opinion that Pinehill has, in aggregate, a range of equity values between US$2.9 billion and US$3.6 billion as at 18 May 2020. Equity Value Valuation Methodology (USD bln) Comments Discounted Cash Flow Analysis 2.9-3.6 Financial projeceons were based on the business plan prepared by Pinehill Trading Comparables 2.4-3.9 Valuaeon range based on EV/2020E EBITDA, EV/2021E EBITDA, 2020E P/E and 2021E P/E muleples for comparable companies Precedent Comparable Transactions 2.5-3.5 Valuaeon range based on EV/LTM EBITDA muleples for comparable transaceons Notes: The high end of the trading comparables valuation range includes a 20% control premium while the low end excludes a control premium. Valuation of the business is performed in local currency and converted to USD at the respective USD:LCY spot rates as of 18 May 2020 for illustrative purposes. 8 Significant De-Risking o The Sellers guarantee a minimum average annual level of audited net profit after tax of US$128.5 million for 2020-2021 o ICBP would pay just US$2.35 billion initially, holding back US$650 million until the earnings guarantee for average audited net profit after tax for the two years 2020-2021 is confirmed o Under the terms of the guarantee, an earnings shortfall above 5% of the guarantee would result in a price reduction under a formula returning 23 times the shortfall to ICBP o There is no allowance for upward price adjustment on higher earnings, and no floor on potential price adjustment downwards (up to and beyond the retained US$650 million) o Pinehill Group has zero bank debt o ICBP is currently in a net-cash position and will finance the purchase with US$300 million in cash and the remaining US$2,048 million in borrowings with anticipated gearing of 0.55x following the transaction o Borrowings will have no recourse to First Pacific or Indofood o The Pinehill Group began a quarter-century ago and is well established in its fast-growing markets and has been closely integrated with noodle production plants and processes nearly identical or similar to ICBP’s o All key
Load more

Recommended publications
  • Citigroup Cancels Financing of Indofood Over Palm Oil Labor Abuses
    Wednesday| June 19 2019 Citigroup Cancels Financing Of Indofood Over Palm Oil Labor Abuses Major Asian, European banks and US brands still linked to controversial company San Francisco, CA – Citigroup has canceled all financing to Indonesian food giant and agribusiness company Indofood (INDF:IJ) following the company’s ousting from the leading palm oil certification scheme, the Roundtable on Sustainable Palm Oil (RSPO). Indofood’s palm oil subsidiaries were dropped from the RSPO after failing to address over 20 violations of the RSPO standard, as well as 10 violations of Indonesian labor law, both of which were found on Indofood-owned palm oil plantations. Citigroup’s cancellation of $140 million represents the loss of Indofood’s second largest source of funds from a Western bank. However, major Japanese, Indonesian, and European banks, as well as US brands such as Pepsico, continue to do business with Indofood. “We are glad to see Citigroup enforce its policy and cut ties with Indofood, as this company has been flouting Indonesian laws, certification standards and international business norms for far too long,” said Hana Heineken, Senior Campaigner on Responsible Finance with Rainforest Action Network (RAN). “This should send a strong signal to Indofood’s remaining financiers and business partners that Indofood is a bad investment.” The largest food company in Indonesia, Indofood has a market cap of 4 billion USD and is a core company of the Salim Group, which has the second largest oil palm land bank in Indonesia. The RSPO investigation of palm oil plantations operated by Indofood’s subsidiaries was sparked by a complaint against the company, brought by Rainforest Action Network (RAN), International Labor Rights Forum (ILRF) and Indonesian labor rights organization OPPUK in October 2016.
    [Show full text]
  • Palm Oil Sustainability Assessment of Indofood Agri Resources
    Palm oil sustainability assessment of Indofood Agri Resources Commissioned by: September 2015 Colophon Report: Palm oil sustainability assessment of Indofood Agri Resources Commissioned by: Rainforest Foundation Norway, Rainforest Action Network. Authors: Albert ten Kate, Adriani Zakaria. Project number: 3152 Date: September 2015 Cover photo: IndoAgri Kedang Makmur estate, East Kalimantan May 2015, © Aidenvironment Coordinates: S 0°26'12.60"; E 116°1'31.63" Aidenvironment Barentszplein 7 1013 NJ Amsterdam The Netherlands + 31 (0)20 686 81 11 [email protected] www.aidenvironment.org Palm oil sustainability assessment of IndoAgri 2 Contents Executive Summary 4 1. Basic facts about Indofood 7 1.1 Indonesia's largest food company 7 1.2 Indofood companies 7 1.3 Ownership structure 8 2. Oil palm business 9 2.1 The number 3 private palm oil company in Indonesia 9 2.2 Oil palm planted area 9 2.3 Oil palm expansion 10 2.4 IndoAgri’s palm oil customers 11 2.5 Indofood’s joint ventures 13 3. Sustainability assessment 15 3.1 Methodology 15 3.2 Sustainability policy 15 3.3 Metau forest 18 3.4 Lonsum and its land disputes 23 3.5 Fires 25 3.6 Greenhouse gas emissions 28 3.7 Conserving biodiversity 29 3.8 Salim group clearing orangutan habitat 30 4. Stakeholders demanding sustainability 32 Conclusion 34 Glossary and explanation of terms 35 References 36 Palm oil sustainability assessment of IndoAgri 3 Executive Summary Oil palm business and ownership structure PT Indofood Sukses Makmur (Indofood) is Indonesia's largest food company. Its revenue for 2014 was IDR 63.6 trillion, equivalent to USD 5.1 billion.
    [Show full text]
  • Indofood Sukses Makmur and First Pacific
    Indofood Sukses Makmur and First Pacific: Financial Risks from Chain Reaction Research is a coalition of: Aidenvironment Climate Advisers Upstream Investments Profundo 1320 19th Street NW, Suite 400 PT Indofood Sukses Makmur Tbk. (Indofood SM), listed on the Indonesia Stock Washington, DC 20036 Exchange, is the country’s largest food company and the market leader in instant United States noodles, flour, cooking oils, margarine and fats. Its largest shareholder is First Pacific Website: www.chainreactionresearch.com Co. Ltd., a Hong Kong-listed conglomerate with interests in food, telecom, Email: [email protected] construction, and natural resources. The Indonesian Salim family controls First Pacific. Primary contacts: Both Indofood SM and First Pacific face financial risks from their upstream Fenneke Brascamp, Aidenvironment investments. These material risks include contested land and labor risks associated Gabriel Thoumi, CFA, FRM, Climate Advisers with their supply chains and reputation risks from their investments in their Bruna Tomaidis Lima, Profundo Singapore-listed oil palm plantation subsidiary Indofood Agri Resources. Key Findings 42 percent of Indofood Agri Resources’ 549,287 ha total landbank is contested. Indofood Agri Resources (Indofood Agri) controls 63 concessions. Six plantations (7 percent of its total landbank) allegedly have community conflicts and labor controversies. Four plantations (9 percent of its undeveloped landbank) are located on peat and/or forest areas, potentially prohibited from development given Indonesian government regulations. Approximately 5,900 ha of peatland burned in 2015 on Indofood concessions. 16 plantation companies (29 percent of its total landbank) do not publish concession maps. PT Indofood Sukses Makmur Tbk Bloomberg ticker INDF:JK A RSPO complaint was recently filed accusing Indofood Agri of employing child No.
    [Show full text]
  • Annual Report 2020 at a Glance
    ANNUAL REPORT 2020 AT A GLANCE Indofood Agri Resources Ltd. (IndoAgri) is a vertically integrated agribusiness group with activities spanning the entire supply chain from research and development (R&D), seed breeding, oil palm cultivation and milling; as well as the production and marketing of cooking oil, shortening and margarine. Headquartered in Singapore, we are among the largest palm oil producers in Indonesia. Our branded cooking oil, shortening and margarine products together garner a leading share in the domestic market. As a diversified agribusiness group, IndoAgri also engages in the cultivation of sugar cane, rubber and other crops. OUR VISION To become a leading integrated agribusiness, and one of the world-class agricultural research and seed breeding companies. OUR VALUES With discipline as the basis of our way of life; we conduct our business with integrity; we treat our stakeholders with respect; and together we unite to strive for excellence and continuous innovation. OUR MISSION To be a low-cost producer, through high yields and cost- effective and efficient operations. To continuously improve our people, processes and technology. To exceed our customers’ expectations, whilst ensuring the highest standards of quality. To recognise our role as responsible and engaged corporate citizens in all our business operations, including sustainable environmental and social practices. To continuously increase stakeholders’ value. INDOFOOD AGRI RESOURCES LTD ANNUAL REPORT 2020 1 CONTENTS GROUP OVERVIEW Our Milestones 2 Geographical
    [Show full text]
  • 第一太平有限公司 (Incorporated with Limited Liability Under the Laws of Bermuda) Website: (Stock Code: 00142)
    THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular. If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in First Pacific Company Limited, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee. 第一太平有限公司 (Incorporated with limited liability under the laws of Bermuda) Website: www.firstpacific.com (Stock Code: 00142) VERY SUBSTANTIAL ACQUISITION AND CONNECTED TRANSACTION PROPOSED ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF PINEHILL COMPANY LIMITED BY PT INDOFOOD CBP SUKSES MAKMUR TBK AND NOTICE OF SGM Independent Financial Adviser to the Independent Board Committee and to the Independent Shareholders SOMERLEY CAPITAL LIMITED A letter from the Board is set out on pages 6 to 28 of this circular. A letter from the Independent Board Committee is set out on pages 29 and 30 of this circular.
    [Show full text]
  • Revision of Annual Caps in Respect of Indofood's Continuing Connected
    The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. (Incorporated in Bermuda with limited liability) (Stock code: 00142) Website: http://www.firstpacco.com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hareholders are referred to the April 2007 Announcement and the May 2007 Circular, which set out a series of related continuing connected transactions relating to Indofood’s Noodles Business, which are also set out in Table A below. – 1 – Indofood has been monitoring the amount of the Noodles Business Transactions, having regard to internal estimates of demand and operating conditions.
    [Show full text]
  • Surya Citra Media REDUCE Sector: Media (Underweight) (Unchanged) Rating Momentum*
    Asiamoney'sAsiamoney’s 2014 20132013 Finance Asia's BestBestDomestic Domestic Best Corporate flash EquityEquity House House Equity House 3 December 2014 Surya Citra Media REDUCE Sector: Media (Underweight) (Unchanged) Rating momentum*: Wendy Chandra Price: IDR3,435 - TP: IDR2,360 (From IDR2,550) E-mail: [email protected] TP/consensus: 68.8% Phone: +6221 250 5081 ext. 3606 TP momentum*: JCI:5,176 Dimming the lights Exhibit 1. Company information Market cap (IDRt/USDb) : 50.2/4.1 . Severe revisions likely to come from the street: Consensus remains 3M avg.daily t.o.(IDRb/USDm) : 3.57/2.9 too bullish on SCMA’s outlook (exhibit 5), in our view, despite the recent Bloomberg code : SCMA IJ disappointing 3Q14 earnings caused by weak top-line growth (+4% y-y; Exhibit 2. Shareholders information -21% q-q). Following its weak performance, SCMA management recently PT Elang Mahkota Teknologi : 66.68 (%) lowered the company’s 2014 top-line growth expectations, from 15% y-y Free float : 33.32 Source: Company initially to just 8% at present. Also, guidance for SCMA’s 2015 revenue Exhibit 3. Key forecasts and valuations growth has also been further cut to just 11% y-y. Given consensus Year to 31 Dec 2013 2014F 2015F 2016F estimates of nearly 14% y-y top line growth in 2014 and 17% in 2015, Revenue (IDRbn) 3,695 3,973 4,339 4,899 we expect the consensus to see severe downward earnings revisions. EBIT (IDRbn) 1,759 1,832 1,987 2,264 Net profit (IDRbn) 1,280 1,367 1,536 1,766 .
    [Show full text]
  • BCA Vista Indonesia Morning Digest 11 MAY 2016
    BCA Vista Indonesia Morning Digest 11 MAY 2016 Vol TODAY'S HEADLINES INDICES Last Chg (%) YTD (%) (US$ m) ASEAN Economy Indonesia (IDX) 4,763.12 0.29 3.70 327.71 Forex reserves stood at USD107.7bn in Apr-16. (Jakarta Post) Malaysia (KLCI) 1,635.84 0.22 (3.38) 292.22 Philippines (PCOMP) 7,174.88 2.62 3.20 151.51 Industry/Corporate Singapore (STI) 2,741.15 (0.90) (5.00) 479.49 Retail car sales dropped by 8.4% MoM in Apr-16. (Bisnis Indonesia) Thailand (SET) 1,390.13 (0.29) 7.93 1,109.44 2W sales dropped by 15.1% MoM in Apr-16. (Bisnis Indonesia) REGIONAL & USA Subsidized loan rates to be reduced to 7% in 2017. (Investor Daily) China (SHCOMP) 2,832.59 0.02 (20.72) 19,705.88 The completion of Jabodetabek LRT Project may get delayed to 2019. Hongkong (Hang Seng) 20,242.68 0.43 (7.49) 2,261.28 (Investor Daily) India (SENSEX) 25,772.53 0.33 (0.72) 60.69 Jasa Marga (JSMR IJ) wins toll road projects worth of IDR24.7tn. (Investor Japan (Nikkei) 16,565.19 2.15 (12.97) 13,435.83 Daily) Korea (KOSPI) 1,982.50 0.75 1.08 4,068.00 Taiwan (TWSE) 8,156.29 0.30 (1.49) 1,873.18 USA (Dow Jones) 17,928.35 1.26 1.84 5,044.75 Source: Bloomberg Please see the overleaf for news details CURRENCIES & RATES Last -1 Week -1 Month EoP 2015 IDR/USD 13,286 13,188 13,144 13,788 IDR/USD (1-month NDF) 13,385 13,290 13,175 13,918 BI Rate 6.75 6.75 6.75 7.50 JIBOR (ON / 1 yr) 4.94 / 7.81 4.92 / 7.81 4.89 / 7.86 8.26 / 9.07 FASBI ON / SBI 9 mth 4.75 / 6.60 4.75 / 6.60 4.75 / 6.60 5.50 / 7.10 Term Deposit ( 1 mth / 6 mth) 4.70 / 4.85 4.70 / 4.85 4.70 / 4.85 4.70 / 4.85 Base
    [Show full text]
  • Indoagri's New Sustainable Palm Oil Policy Fails To
    INDOAGRI’S NEW SUSTAINABLE PALM OIL POLICY FAILS TO ADDRESS KEY ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) RISKS February 2017 Salim Group’s Indofood Agri Resources Ltd (IndoAgri) has published a new “Sustainable Palm Oil Policy” amidst an ongoing RSPO complaint relating to labor rights violations on its palm oil plantations operated by subsidiaries PT. PP London Sumatra Indonesia Tbk. (Lonsum) and PT. Salim Ivomas Pratama Tbk. (Salim Ivomas). Unfortunately, IndoAgri’s policy falls short on addressing key ESG risks such as protecting valuable forests, preventing the exploitation of workers or committing to independent verification of its palm oil suppliers to No Deforestation, No Peatland and No Exploitation (NDPE) principles. Without such policy provisions, IndoAgri’s investors and financiers continue to be exposed to serious ESG risks. Figure 1: Indofood’s company structure IndoAgri, and its controlling companies Indofood and First Pacific (see Figure 1), have extensive direct ties to major financial institutions, investors, joint venture partners and palm oil supply chain customers. Prominent financiers include HSBC, Sumitomo Mitsui Financial, Malayan Banking, Deutsche Bank, Bank Mandiri, Citigroup, Mizuho, Bank of Tokyo-Mitsubishi UFJ, Bank of America, JP Morgan Chase, Royal Bank of Scotland, Rabobank, Standard Chartered, BNP Paribas and DBS. More than 200 independent institutional investors are also known to hold significant equity positions in Indofood, with significant shares held by Brandes Investment Partners and Lazard. Key joint venture partners and customers include Pepsico, Nestle, Wilmar and Unilever. These companies share responsibility with IndoAgri in relation to environmental and social violations, and continue to be exposed to serious ESG risks until IndoAgri’s policies and practices are brought into line with responsible palm oil production.
    [Show full text]
  • Download Case Study
    (INDF:IJ) Indonesia’s largest integrated food company PT Indofood Sukses Makmur TBK (Indofood) faces material risks related to labour, land rights and deforestation from upstream investments in the palm oil sector through its subsidiary Indofood Agri Resources, and by association with plantations controlled by the Salim Group. COMPANY PROFILE & SUSTAINABILITY COMMITMENTS CEO Anthoni Salim FOREST RISK COMMODITIES Palm oil First Pacific Co (0142:HK), majority owned Plantations, processing, manufacturing, PARENT COMPANY by Salim Group SUPPLY CHAIN EXPOSURE wholesale AFFECTED TROPICAL MARKET CAP (USD) 5.3 billion USD (FT.com) Indonesia FOREST AREAS Direct subsidiary: Indofood Agri ANNUAL REVENUE (USD) FY2015 5 billion USD (FT.com) RELEVANT SUBSIDIARIES Resources (SGX: 5JS). Plantation companies: PP London HEADQUARTERS Indonesia Sumatra Indonesia (Lonsum) (LSIP:IJ), Salim Ivomas Pratama (SIMP:IJ), PT Gunta Total: 549,287 ha across 63 concessions Samba & PT Gunta Samba Jaya. See LANDBANK (HA) Planted: 246,359 ha Figure 1. NDPE POLICY No KNOWN BUSINESS RELATIONSHIPS Joint venture Partners: PepsiCo, Nestlé, Wilmar Partial THIRD PARTY VERIFICATION RSPO member. 60% of Indofood subsidiaries’ planted area not RSPO certified (SPOTT, 2017 & SPOTT, 2017a). Salim Group-connected plantations are not covered (Mongabay, 2016). No commitment to third party verification Other buyers: Unilever, Procter & beyond RSPO for entire supply chain. Gamble, Golden Agri Resources, Musim Mas Group, Apical, Cargill, IOI Group TRACEABILITY Weak (Greenpeace, 2017) 36% of palm oil processed by IndoAgri not traceable to origin. SPOTT.org scores on traceability to mill: PP London Sumatra Indonesia: 37.5% Salim Ivomas Pratama: 25% TRANSPARENCY Partial SPOTT.org scores: PP London Sumatra Indonesia: RSPO reporting: 57.1% Landbank and maps: 62.5% Salim Ivomas Pratama: RSPO reporting: 50% Landbank and maps: 62.5% * Financiers of both Indofood and/or parent company First Pacific.
    [Show full text]
  • 44 BAB IV HASIL PENELITIAN DAN PEMBAHASAN A. Gambaran
    BAB IV HASIL PENELITIAN DAN PEMBAHASAN A. Gambaran Umum Objek Penelitian Pasar modal syariah dapat diartikan sebagai kegiatan dalam pasar modal sebagaimana yang diatur dalam UUPM yang tidak bertentangan dengan prinsip syariah. Penerapan prinsip syariah di pasar modal tentunya bersumberkan pada Al Quran sebagai sumber hukum tertinggi dan Hadits Nabi Muhammad SAW. Selanjutnya, dari kedua sumber hukum tersebut para ulama melakukan penafsiran yang kemudian disebut ilmu fiqih. Salah satu pembahasan dalam ilmu fiqih adalah pembahasan tentang muamalah, yaitu hubungan diantara sesama manusia terkait perniagaan. Berdasarkan itulah kegiatan pasar modal syariah dikembangkan dengan basis fiqih muamalah.Terdapat kaidah fiqih muamalah yang menyatakan bahwa Pada dasarnya, semua bentuk muamalah boleh dilakukan kecuali ada dalil yang mengharamkannya. Konsep inilah yang menjadi prinsip pasar modal syariah di Indonesia.1 Bertransaksi di JII merupakan salah satu bentuk perdagangan yang dibangun berdasarkan atas persaingan, kompetensi dan berorientasi keuntungan (profit oriented). Terkadang para pelaku bisnis di bursa efek telah mengikuti peraturan yang berkaitan dengan jenis akad kesepakatan yang dilakukan, meliputi surat-surat berharga yang mubah (boleh bermuamalah dengannya) dan mereka jauh dari perjudian (spekulasi), pegadaian dan pembiayaan ribawi atau transaksi lainnya yang diharamkan. Disamping itu mereka juga harus berakhlaq dan beretika dengan akhlaq yang benar dan lurus sebagaimana disebutkan berikut:2 1. Jujur dalam transaksi dan informasi. 1 Situs resmi bursa efek Indonesia, www.ojk.go.id, diakses tanggal 11 November 2015 2 Muhammad Mustaqim, Pengaruh Kurs Rupiah, Inflasi, dan Jumlah Uang Beredar terhadap Indeks Harga Saham pada JII, 2015, hlm. 59-60 44 45 2. Tidak menyembunyikan informasi (transparan). 3. Amanah dalam transaksi. 4. Menepati janji dan akad.
    [Show full text]
  • PT. Indofood Sukses Makmur Tbk Strategies for More International Growth & Global Competition
    PT. Indofood Sukses Makmur Tbk Strategies for more International growth & Global Competition. Abdulrahman Khaled Ba Wazir1, Daisy Mui Hung Kee2, Aric Farrel Gunawan Siregar3, Chan Siow Tian4, Chang Seng Loong5, Andre Wijaya Yamaputra6, Sara Wahbeh7 Universiti Sains Malaysia1,2,3,4,5 Ma Chung University6 Kuwait University7 Correspondence Email: [email protected] ABSTRACT This research aims to explore the internationalization process of PT.Indofood Sukses Makmur Tbk. To know how the strategies deployed by the company compete in the international market as well as suggest potential internationalization method for PT.Indofood Sukses to pursue for more internationally existence. In this research the author used secondary data, such as previous journal and report issued by the company. The conclusion of this research is that the key of success from PT.Indofood Sukses Makmur Tbk, is the mix marketing strategy and also their cooperation with multi-national companies. Their cooperation with other multi-national companies also will help the company to avoid being collapsed and instead growing steadily in the local market and international market as well. For that reason the author will try to analyse the strategies deployed by PT.Indofood Sukses Makmur INTRODUCTION PT Indofood Sukses Makmur Tbk is a food and beverage manufacturing company located at the Pasuruan, Indonesia. The company was established on 14th August 1990 and the founder was Sudono Salim with the name of PT Panganjaya Intikusuma. Later in 5th February 1994 the company’s name was changed to what we know today which is PT Indofood Sukses Makmur Tbk. The company focused on the developing of instant noodle in the beginning of the establishment and then moves on to the other kind of food and beverages.
    [Show full text]