COMPANY UPDATE INDONESIA

November 22, 2010 Research Division

PT Unilever Indonesia Tbk.

Admirable Market Position With Consistently
BUY
Strong Operational and Financial Performance.
Last Price (Rp) 17,450

Summary
Fair Value (Rp) 21,154 ( +21.2%) Our optimistic view on UNVR is based mainly on its recent acquisition of
Sara Lee brands, which will, in our opinion, boost earning significantly.
However, we also admire UNVR stable performance, in terms of net profit
Stock Data growth, enviable cash flow and dividend payment whose track record can be
Bloomberg UNVR.IJ traced back for more than decades ago. Another plus is the positive push
Issued Shrs. (mn) 7,630 from the most anticipated Indonesian economic growth. All of these imply
Market Cap (Rp bn) 133,143.5 UNVR low risk status.
52 W High / Low Rp 19,200/Rp 10,550
Description:
Major Shareholders : UNVR has built long history of doing business in Indonesia, a respectable 77
Unilever Indonesia years. No wonder that it has developed strong foothold in the Indonesian
Holding B.V. 85%
consumer goods sector. Its expertise in persuasive marketing is a benchmark
Public 15%
for other consumer goods producers, and overtime it has delivered a leading
position for UNVR. Social campaign for more hygienic lifestyle, as well as
persuasive ads for brighter skin, shinier hair, softer and cleaner laundry, are
Earnings Estimates all directed toward its strong but simple and understandable motto of
getting people “to feel good and to look good”. It is difficult not to find any
2010F 2011F
product carrying UNVR brands in our household or even in our friends and
Net Profit (Rp bn)
relatives homes (try to think of your toothpaste, soap, shampoo, detergent,
AAA Estimate 3,402 4,422
deodorant, favorite ice cream; whether they carry these brands, Pepsodent,
Consensus 3,638 4,186
Lux, Lifebouy, Clear, Dove, Rinso, Molto, Rexona, Walls, Sariwangi etc.).
EPS (Rp) Along with its impeccable distribution networks and extensive training of its
AAA EPS 446 580 front liners, an even longer existence in Indonesia is assured.
Consensus EPS 478 551

Financial and Operational Performance
UNVR strong performance is observable from its ability to keep increasing
its sales, gross profit margins, EBIT margins and net profit margins, albeit
marginally y.o.y. (see table below). This is actually efficiency and economic
of scale in the working.

Valuation
While UNVR excessively high P/E may be an obstacle for some investors, our
buy recommendation is primarily based on the expectation of significant
jump (apprx. 30%) in its bottomline profit next year, following the
acquisition of Sara Lee brands. One-best seller is most possibly Zwitsal baby
product, which is a new type of addition in the UNVR product portfolio.
Other brands of Sara Lee are also relatively familiar within Indonesian
consumer e.g. Purol, Sanex, Brylcream. In addition, UNVR has just also
begun the launching of its water purifier, whose impact on the total sales
will be apparent in the next one or two years from now.
FINANCIAL SUMMARY
A. Indrajatri, CFA (In Rp billion) 2008A 2009A 2010F 2011F 2012F
a.indrajatri@aaasecurities.com Historical vs Forecast
PT. Andalan Artha Advisindo Sekuritas Revenue 15,578 18,247 20,009 26,013 31,216
Equity Tower Building 22th Floor EBIT 3,431 4,215 4,602 5,983 7,180
Jl. Jend. Sudirman Kav. 52 – 53 Net Profit 2,407 3,044 3,402 4,422 5,306

Jakarta 12190 Dividend 1,999 2,422 2,721 3,538 4,245

Payout Ratio 83% 80% 80% 80% 80%
Ph : +62 21 2991 6600
P/E 24.8 27.7 39.1 30.1 25.1
Fax : +62 21 515 2644
Source : Company; AAA Securities

PT Andalan Artha Advisindo Sekuritas 1

 COMPANY UPDATE INDONESIA
November 22, 2010 Research Division

Our DDM model uses relatively low discount factor, referring to its low risk, be it business or financial risks. In the banking
industry UNVR is considered a prime lending customer with only fractional spread applied to it short-term overdrafts. In reality,
however, UNVR rarely need bank financing due to its large operational cash flow generation. Hence for equity holder it makes
sense to use a 9.5% discount factors to its dividend payment.

Other justifications related to UNVR high P/E of 39x of our Target Price, are a) the long term proven track record of UNVR
ability in creating household brand, an ability which we think to continue at even faster pace in the future. b) UNVR has the
required strength to hold the price up during down times in the market as well as better than peer’s performance during
upswings. The stable net profit margin and ROE at the range of 15 % - 17% and 51%- 83%, respectively during the last decade
also support our argument.

PT Andalan Artha Advisindo Sekuritas 2

COMPANY UPDATE INDONESIA
November 22, 2010 Research Division

PT Andalan Artha Advisindo Sekuritas

(Member of Indonesia Stock Exchange)
 General :+62-21-2991 6600
 Investment Banking : +62-21-2991 6688
 Fixed Income Dealing :+62-21-2991 6666
 Equity Dealing :+62-21-2991 6700
22/F Equity Tower Building
Jalan Jenderal Sudirman Kav. 52-53
Jakarta 12190, Indonesia
Facsimile:+62-21-5152644
E-mail: all_research@aaasecurities.com

Disclaimer : The information contained herein has been compiled from sources that we believe to be reliable.No warranty (express or implied) is made to
the accuracy or completeness of the information.All opinions and estimates included in this report constitute our judgement as of this date, without
regards to its fairness, and are subject to change without notice.This document has been prepared for general information only, without regards to the
specific objectives, financial situation and needs of any particular person who may receive it. No responsibility or liability whatsoever or howsoever arising
is accepted in relation to the contents hereof by any company mentioned herein, or any their respective directors, officers or employees.This document is
not an offer to sell or a solicitation to buy any securities.This firms and its affiliates and their officers and employees may have a position, make markets,
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you. Available only to person having professional experience in matters relating to investments.© PT Andalan Artha Advisindo Sekuritas 2010.

PT Andalan Artha Advisindo Sekuritas 3