Equity Research

Saratoga Investama Sedaya NOT RATED

SRTG IJ / SRTG.JK

Company Update | BCAS NR | Investment Sector

2 June 2021
Reaping the rewards; Exploring further
Mohammad Fakhrul Arifin
Pulling in the catch, with portfolios at maturity stage of industry cycle mohammad.arifin@bcasekuritas.co.id
PT Saratoga Investama Sedaya (SRTG), founded in 1997, is currently one +6221 23587222 ext 186
of Indonesia’s leading investment companies (Private Equity), with a
USD2.2bn Net Asset Value (NAV) and over 15 firms within its portfolio, Pandu Anugrah
ranging from natural resources, infrastructure and consumer goods to pandu.anugrah@bcasekuritas.co.id
technology. Going forward, SRTG plans to add exposure to consumer +6221 23587222 ext 168
sector and strengthen its positioning in the rising technology sector. At this
juncture, existing portfolio (i.e. TBIG, ADRO, MDKA, and MPMX) will remain
the core dividend income generator, with value contribution of around Current Price: IDR1,090
94%. Recent inclusion of tech (Julo: fintech) and consumer portfolios
(Deltomed), have continued to progress well, most importantly on
Deltomed (Angtangin) with strong positioning as the second-largest herbal 12M PRICE PERFORMANCE
wind flu remedy brand by market share. (IDR) (%)

Seeking more investments with loaded ammunition 1,700 120.0

While existing portfolios might appear to have high exposure to the mature 1,300 80.0
stage of industry cycle, the undoubtedly solid capital structure of SRTG
900 40.0
should enable the Company to further broaden its portfolios. Our discussion
with the Company suggests that the group is likely in motion to expand its 500 -

portfolio this year, adding more exposure to consumer sector in the effort
100 (40.0)
to monetize demographic profile and the rising digital ecosystem (Tech SRTG IJ (LHS) Rel. to JCI performance (RHS)
companies), given early stage of the industry cycle. On a separate note, Vol (mn) 100
we view that any plans to divest ownership of the existing portfolio should
be based on the clear capability to re-invest on portfolio with even greater May-20 Aug-20 Nov-20 Feb-21 May-21
dividend income generation. This possibility should not be ruled out, as (100)

valuation in several portfolios has been unlocked with returns of 82.2% -

Source: Bloomberg
235.1% since early 2020.
Widening NAV discount; Strong capital structure
STOCK PERFORMANCE
One of the key appealing factors of SRTG is the obvious/widening valuation
Y TD 1M 3M 12M
gap between its NAV and its market value. This valuation gap, which has
Absolute 58.9% -8.0% -3.1% 93.3%
widened recently to 71%, has been mostly driven by a surge in its two
JCI Return -0.5% -0.8% -6.7% 25.1%
biggest portfolios: TBIG and MDKA. If we were to look at the Company’s
Relative 59.4% -7.2% 3.6% 68.1%
valuation metrics, SRTG is trading at a much-discounted PBV of 0.09x,
Source: Bloomberg
suggesting an even more appealing value proposition. Capital structure
also displays a rather prudent strategy, with Loan to Value (LTV) at low-
double-digit (10.2%) figure in 2020, while finance & operating cost has FINANCIAL HIGHLIGHT
been held remarkably low at 1.0% and high interest coverage ratio (3.7x) EV/EBITDA EPSG P/E P/B
translates into a strong cash flow generation to cover its outstanding debt. (x) (%) (x) (x)

The biggest risk of the Company would be a potential loss of momentum 2018 n.a. (289.1) (2.4) 0.9
to add more exposure to arising digital companies. 2019 1.6 219.0 2.0 0.7
2020 1.4 20.1 1.7 0.5
Exhibit 1. Financial summary Source: BCA Sekuritas

YE to 31 Dec (IDR bn) 2018 2019 2020 3M20 3M21

Equity investment, interest,div (6,105) 8,241 9,187 (5,901) 1,123 MARKET DATA
Operating
income income (6,243) 8,084 9,004 (5,968) 1,068 12M price range (IDR) : 540 - 1,345
EV/EBITDA (x) (0.98) 0.73 0.64 (1.05) 5.77 12M PE range (x) : 0.9 - 33.2
EBITDA (6,244) 8,083 9,004 (5,969) 1,068 Outstanding shares (mn) : 13,565
Net profit (6,135) 7,344 8,823 (6,017) 1,157 Market cap (IDRbn)/(USDmn) : 14,786 / 1,035
Net Profit Growth (%) (294.0) n.a. 20.1 0.0 n.a.
Avg daily turn. (IDRbn/USDmn) : 13.9 / 1.0
EPS (IDR) (2,262) 2,708 3,263 (2,180) 423
Source: Bloomberg
EPS Growth (%) (294.0) n.a. 20.5 0.0 n.a.
DPS (IDR) 110 55 110 0 0
PE (x) (0.48) 0.40 0.33 (0.50) 2.58 SHAREHOLDERS
Dividend yield (%) 10.1 5.0 10.1 0.0 0.0 Edw in Soeryadjaya : 33.1%
BVPS (IDR) 5,887 8,397 11,611 6,077 11,901 PT Unitras Pertama : 32.7%
PB (x) 0.19 0.13 0.09 0.18 0.09 Sandiaga Salahuddin Uno : 21.5%
ROE (%) (38.4) 32.2 28.1 (35.9) 3.6 Others : 12.0%
Treasury : 0.7%
Sources: Company, BCA Sekuritas
Source: Bloomberg
Exhibit 2. SRTG share price vs. NAV growth

Sources: Company, BCA Sekuritas

Exhibit 3. SRTG quality investment portfolio across key sectors

Sources: Company, BCA Sekuritas

Saratoga Investama Sedaya, 1 June 2021 2

Exhibit 4. NAV Analysis, at 71% discount to NAV Exhibit 5. Loan to Value (LTV) vs. Net Debt

Sources: Company, BCA Sekuritas Sources: Company, BCA Sekuritas

Exhibit 6. Sector breakdown of investee companies Exhibit 7. Listed and unlisted investee values

Sources: Company, BCA Sekuritas Sources: Company, BCA Sekuritas

Exhibit 8. Value of listed investee companies Exhibit 9. Value of unlisted investee companies

Sources: Company, BCA Sekuritas Sources: Company, BCA Sekuritas

Saratoga Investama Sedaya, 1 June 2021 3

Exhibit 10. Ownership structure Exhibit 11. Investment and divestment

Sources: Company, BCA Sekuritas Sources: Company, BCA Sekuritas

Exhibit 12. Diversified sources of cash and liquidity

Sources: Company, BCA Sekuritas

Exhibit 13. Dividend income Exhibit 14. Consisted dividend yield

Sources: Company, BCA Sekuritas Sources: Company, BCA Sekuritas

Saratoga Investama Sedaya, 1 June 2021 4

Exhibit 15. Low cost ratio Exhibit 16. Interest coverage ratio

Sources: Company, BCA Sekuritas Sources: Company, BCA Sekuritas

Exhibit 17. Revenue contribution Exhibit 18. EBITDA contribution

Sources: Company, BCA Sekuritas Sources: Company, BCA Sekuritas

Exhibit 19. Low net gearing among other companies

Sources: Company, BCA Sekuritas

Saratoga Investama Sedaya, 1 June 2021 5

Exhibit 20. SRTG Financial Summary
Income Statement
2018 2019 2020 3M20 3M21
Year-end 31 Dec (IDRbn)
Investments in shares (7,251) 6,226 8,419 (5,904) 1,122
Dividend and interest income 1,147 2,015 768 3 1
Operating expense 138 157 182 68 55
Operating income (6,243) 8,084 9,004 (5,968) 1,068
Interest expense (282) (317) (221) (63) (48)
Net (loss)/gain on exchange rate (150) 73 (26) (318) (63)
Other income/expenses, net (34) (39) (13) (1) (1)
EBITDA (6,244) 8,083 9,004 (5,969) 1,068
Pretax profit (6,685) 7,738 8,693 (6,385) 957
Income tax 550 (394) 130 368 200
Minority interest 60 (27) (1) (1) (1)
Net profit (6,135) 7,344 8,823 (6,017) 1,157
EPS (2,262) 2,708 3,263 (2,180) 423

Balance Sheets
2018 2019 2020 3M20 3M21
Year-end 31 Dec (IDRbn)
Cash and cash equivalents 782 394 431 696 600
Restricted cash 1 1 1 1 1
Receivables, net 366 440 81 136 79
Prepaid taxes 1 1 1 14 2
Advances and prepaid expanses 2 1 2 11 9
Investment in shares 18,827 25,691 34,405 20,056 35,735
Other assets 136 129 129 26 131
Total assets 20,115 26,658 35,049 20,940 36,557
Current liabilities 58 34 12 33 15
Non-current liabilities 4,093 3,849 3,641 4,138 3,985
Total liabilities 4,151 3,883 3,652 4,171 4,000
Minority interest 309 49 19 46 19
Total equities 15,964 22,774 31,397 16,768 32,557
Total liabilities & equities 20,115 26,658 35,049 20,940 36,557

Cash Flow Statement

2018 2019 2020 3M20 3M21
Year-end 31 Dec (IDRbn)
Receipts of dividends and sales 940 1,839 1,070 319 0
Depreciation & amortization (1) (1) (1) (0) (0)
Others (1,318) (1,164) (702) (329) (315)
Operating C/F (379) 675 367 (11) (315)
Capital expenditure (0) (1) (0) (0) (0)
Others 0 0 0 0 0
Investing C/F (0) (0) (0) (0) (0)
Dividend paid (201) (530) (165) 0 0
Net change in debt 1,325 (522) (88) 301 470
Others financing (957) (12) (60) (3) 0
Financing C/F 168 (1,064) (314) 298 470
Change in cash (120) (388) 37 303 170
Cash flow at beginning 902 783 394 394 431
Cash flow at end 783 394 431 697 600

Key Ratios 2018 2019 2020 3M20 3M21

Operating profit margin (%) 102.3 98.1 98.0 101.1 95.1
EBITDA margin (%) 102.3 98.1 98.0 101.2 95.1
EBT margin (%) 109.5 93.9 94.6 108.2 85.3
Net margin (%) 100.5 89.1 96.0 102.0 103.1
ROA (%) (30.5) 27.6 25.2 (28.7) 3.2
ROE (%) (38.4) 32.2 28.1 (35.9) 3.6
Current ratio (x) 19.8 24.5 43.7 25.6 45.1
Cash ratio (x) 13.5 11.5 36.7 21.1 39.7
Interest coverage (x) (22.1) 25.5 40.8 (94.3) 22.4
Gearing (%) 24.7 14.6 10.3 23.6 11.6
Net gearing (%) 16.5 15.6 9.2 15.1 10.3
A/R turnover (days) (29.6) 17.9 10.3 (8.4) 25.8
Inventory turnover (days) 0.0 0.0 0.0 0.0 0.0
A/P turnover (days) 0.5 7.5 14.1 3.0 47.6
Sources: Company, BCA Sekuritas

Saratoga Investama Sedaya, 1 June 2021 6

 Equity Research Division Institutional Equity Market Division Sales Equity Market Division
research@bcasekuritas.co.id ecm@bcasekuritas.co.id sales@bcasekuritas.co.id

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Saratoga Investama Sedaya, 1 June 2021 7