PT Sekar Laut Tbk produces and sells crackers, tomato and chili sauces, cooking spices, buns, and ready to use seasonings under the Finna brand name in Indonesia and internationally. It also involved in the trading of consumer goods; and restaurant business. The company also exports its products to the Netherlands, Korea, England, Australia, China, and internationally. PT Sekar Laut Tbk was founded in 1976 and is headquartered in Surabaya, Indonesia.

Indonesia

PT Sekar Laut Tbk

Consumer Cyclical

The company has a track record of regular dividend payments. It has paid dividends in each of the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has been good and slightly above its peers. On average, the company pays dividends annually. 

SKLT.JK reported revenue of IDR 2 288 227mn in the last 12 months, up 28% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 186% from FY23 to IDR 35.86.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 9ppts over past six months and grown 1ppts faster in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported modest EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 8.2% in the last 12 months, up from 7.7% in FY23. 

Historically, SKLT.JK has reported modest net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 4.8%, a growth from 4.4% in FY23. 

PT Sekar Laut Tbk reported a return on equity (RoE) of 16.6% in the last 12 months, up from 12.9% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 7.8% in the last 12 months, an increase from 6.7% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to 11.0%, above the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 3.2 in the past several years. This ratio implies a excellent shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

SKLT.JK has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity is very unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note strong debt servicing capacity, adequate interest coverage, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, bleak profitability, and poor working capital management.

In highly turbulent market conditions, SKLT.JK is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, SKLT.JK is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

Considering past and projected metrics, the stock is moderately 'expensive' compared to its peers. Specifically, the stock is 'cheap' on P/E, undervalued on EV/EBITDA, overpriced on P/FCF. 

PT Sekar Laut Tbk

IDR 176

3

PT Sekar Laut Tbk

IDR 176

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

IDR 176

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