6 December 2021

Cisarua Mountain Dairy CMRY.JK CMRY IJ

EQUITY: FOOD & BEVERAGE

A Prospect of Plenty Rating

Starts at Buy
High growth trajectory in an underpenetrated market; Target price
Starts at IDR 4,330
initiate with Buy call rating IPO price
06 Dec 2021 IDR 3,080
Underpenetrated and fast-growing market. The Yogurt, UHT milk, fresh milk, and processed
Implied upside +40.6%
meat market is still in the early stages of growth, due to very low market penetration. What makes
it interesting is the acceleration of consumption that has been showing an incredible growth Market Cap (USD mn) 1,700.6
trajectory (see page 8). In this report we dissect each of the growth drivers, which are more than ADT (USD mn) 0.0
meet the eyes. Consumer trends in healthy lifestyle habits are a major driver, but we also see, for
instance, yogurt sales not only be driven by its health benefits but also innovations in flavor,
texture, and product format. Going forward, we predict yogurt will become a mainstream snack, Research Analysts
leading to higher consumption frequency. UHT milk, despite being the biggest in the liquid milk
Indonesia Research Team
category and the most fragmented market, could still see double digit market growth due to Sandy Ham
increasing in-home consumption and the shifting consumption from non-liquid milk products. sandy.ham@verdhana.id
Lastly, we also believe processed meat has promising upsides as well, with its practicality +62 (8176420576)
advantage facilitating the trend for cooking at home. Jody Wijaya
jody.wijaya@verdhana.id
Product innovations, agility to dominate market, and distribution expansion. What +62 (818876667)
we particularly like about CMRY is its ability to come up with hit quality products and agility to
quickly dominate the market with these innovations. The company has positioned its novel
products in the premium market by focusing on product quality and unique offerings. Cimory
Squeeze (pouch yogurt), Kanzler Singles (ready-to-eat sausage), and UHT milk with unique
flavors are just three examples. Premium market also enables CMRY to command higher ASP,
which is favorable for both sales value and margin level. CMRY’s strong sales growth will endure
as CMRY will be able to substantially expand distribution in both GT and D2C channels from a low
base coupled with its cold chain infrastructure development, which is not easy to replicate by other
companies. We believe UHT milk will be the key products to unlock ambient distribution channel;
management aims to elevate milk division sales contribution from 19% to 30%. All in all, we
foresee CMRY to book NPAT of 34.5% CAGR 2021-2023F (vs. 8.3% of average peers).
Long-term high growth FMCG. We valued CMRY using the DCF method in order to capture
the Company’s long term growth trajectory, giving us a target price of IDR4,330/share, which
implies 27.2x PE 2023F. Our DCF was based on 11.6% WACC and 3.0% terminal growth
assumption. We also applied a PE multiple as a sanity check, benchmarking with companies
in Indonesia and regional countries. We think CMRY deserves a higher multiple on the back
its high growth trajectory, we also predict competition remains manageable at least in the
coming two years (see page 5). Major downside risks would be a worse than expected
competition environment and product safety issues.
Year-end 31 Dec FY20 FY21F FY22F FY23F
Currency (IDR) Actual Old New Old New Old New
Revenue (bn) 1,862 3,584 4,934 6,481
Reported net profit (bn) 177 746 982 1,264
Normalised net profit (bn) 177 746 982 1,264
FD normalised EPS 22.31 93.99 123.73 159.33
FD norm. EPS growth (%) 64.1 321.4 31.6 28.8
FD normalised P/E (x) 138.1 – 32.8 – 24.9 – 19.3
EV/EBITDA (x) 84.7 – 20.3 – 15.9 – 11.6
Price/book (x) 33.3 – 5.0 – 4.3 – 3.7
Dividend yield (%) – – 1.2 – 0.7 – 0.9
ROE (%) 27.4 26.5 18.6 20.6
Net debt/equity (%) net cash net cash net cash net cash
Source: Company data, Verdhana estimates
Verdhana | Bukalapak 06 December 2021

Key Data on Cisarua Mountain Dairy

Performance Cashflow statement (IDRbn)
(%) 1M 3M 12M Year-end 31 Dec FY19 FY20 FY21F FY22F FY23F
Absolute (IDR) M cap (USDmn) 1,700.6 EBITDA 171 288 1,014 1,308 1,750
Absolute (USD) Free float (%) 15% Change in working capital -53 -59 -211 -166 -191
Rel to Jakarta 3-mth ADT (USDmn) 0.0 Other operating cashflow 144 231 809 1,051 1,413
Stock Exchange Cashflow from operations 91 172 598 885 1,222
Composite Index Capital expenditure -155 -105 -74 -877 -524
Free cashflow -64 67 524 8 698
Reduction in investments -14 2 -1 -1 -1
Income Statement (IDRbn) Net acquisitions 0 0 0 0 0
Year-end 31 Dec FY19 FY20 FY21F FY22F FY23F Dec in other LT assets 0 0 0 0 0
Revenue 1,391 1,862 3,584 4,934 6,481 Inc in other LT liabilities 0 0 0 0 0
Cost of goods sold -873 -1,102 -1,885 -2,651 -3,481 Adjustments 24 -6 -56 -9 -31
Gross profit 517 760 1,699 2,283 3,000 CF after investing acts -145 -110 -131 -887 -556
SG&A -383 -526 -748 -1,045 -1,398 Cash dividends 0 0 -400 -224 -295
Employee share expense 0 0 0 0 0 Equitiy issue 0 0 3,806 0 0
Operating profit 135 234 951 1,238 1,602 Debt issue 45 -5 -4 -10 0
EBITDA 171 288 1,014 1,308 1,750 Convertible debt issue 0 0 0 0 0
Depreciation -36 -54 -63 -70 -149 Others 11 -11 8 9 11
Amortisation 0 0 0 0 0 CF from financial acts 56 -16 3,410 -225 -284
EBIT 135 234 951 1,238 1,602 Net cashflow 2 47 3,877 -227 382
Net interest expense -5 -5 -3 17 16 Beginning cash 19 20 67 3,944 3,717
Associates & JCEs 3 -2 3 3 3 Ending cash 20 67 3,944 3,717 4,099
Other income 11 -2 0 1 3 Ending net debt 51 -17 -3,907 -3,690 -4,072
Earnings before tax 143 226 951 1,259 1,621 Balance sheet (IDRbn)
Income tax -36 -49 -205 -277 -357 Year-end 31 Dec FY19 FY20 FY21F FY22F FY23F
Net profit after tax 108 177 746 982 1,264 Cash & equivalents 20 67 3,944 3,717 4,099
Minority interests 0 0 0 0 0 Marketable securities 0 0 0 0 0
Other items 0 0 0 0 0 Accounts receivable 184 321 518 713 936
Preffered dividends 0 0 0 0 0 Inventories 121 139 251 353 464
Normalised NPAT 108 177 746 982 1,264 Other current assets 16 29 63 85 109
Extraordinary items 0 0 0 0 0 Total current assets 341 557 4,776 4,868 5,609
Reported NPAT 108 177 746 982 1,264 LT investments 0 0 0 0 0
Dividends 0 0 -400 -224 -295 Fixed assets 419 470 481 1,270 1,645
Transfer to reserves 108 177 346 758 970 Goodwill 0 0 0 0 0
Valuations and ratios Other intangible assets 0 0 0 0 0
Reported P/E (x) 226.5 138.1 32.8 24.9 19.3 Other LT assets 55 60 117 146 178
Normalised P/E (x) 226.5 138.1 32.8 24.9 19.3 Total assets 815 1,087 5,375 6,284 7,433
FD normalised P/E (x) 226.5 138.1 32.8 24.9 19.3 Short-term debt 15 0 0 0 0
Dividend yield (%) 0.0 0.0 1.2 0.7 0.9 Accounts payable 92 139 222 312 410
Price/cashflow (x) 502.0 122.9 40.9 27.6 20.0 Other current liabilities 74 137 186 249 319
Price/book (x) 43.7 33.3 5.0 4.3 3.7 Total current liabilities 181 275 408 560 729
EV/EBITDA (x) 143.3 84.7 20.3 15.9 11.6 Long-term debt 45 41 37 27 27
EV/EBIT (x) 181.9 104.4 21.6 16.8 12.7 Convertible debt 0 0 0 0 0
Gross margin (%) 37.2 40.8 47.4 46.3 46.3 Other LT liabilities 30 36 44 52 63
EBITDA margin (%) 12.3 15.5 28.3 26.5 27.0 Total liabilities 257 352 488 640 819
EBIT margin (%) 9.7 12.6 26.5 25.1 24.7 Minority interest 0 0 0 0 0
Net margin (%) 7.8 9.5 20.8 19.9 19.5 Preffered stock 0 0 0 0 0
Effective tax rate (%) 24.8 21.6 21.6 22.0 22.0 Common stock 237 237 4,043 4,043 4,043
Dividend payout (%) 0.0 0.0 226.0 30.0 30.0 Retained earnings 322 497 843 1,601 2,571
ROE (%) 21.4 27.4 26.5 18.6 20.6 Proposed dividends 0 0 400 224 295
ROA (pretax %) 17.6 20.8 17.7 20.0 21.8 Other equity and reserves 0 0 0 0 0
Growth (%) Total shareholders' equity 559 734 4,886 5,644 6,614
Revenue 28.0 33.9 92.5 37.7 31.4 Total equity & liabilities 815 1,087 5,375 6,284 7,433
EBITDA 25.3 68.7 251.7 29.0 33.8 Liquidity (x)
Normalised EPS 29.2 64.1 321.4 31.6 28.8 Current ratio 1.88 2.02 11.71 8.69 7.70
Normalised FDEPS 29.2 64.1 321.4 31.6 28.8 Interest cover 28.46 47.95 286.21 509.30 658.64
Source: Company data, Verdhana estimates Leverage
Net debt/EBITDA (x) 0.30 net cash net cash net cash net cash
Net debt/equity (%) 0.09 net cash net cash net cash net cash
Per share
Reported EPS (IDR) n.a. n.a. 93.99 123.73 159.33
Norm EPS (IDR) n.a. n.a. 93.99 123.73 159.33
FD norm EPS (IDR) n.a. n.a. 93.99 123.73 159.33
BVPS (IDR) n.a. n.a. 615.80 711.34 833.56
DPS (IDR) n.a. n.a. 50.41 28.20 37.12
Activity (days)
Days receivable 42.8 48.8 42.1 44.9 45.8
Days inventory 49.0 42.5 37.3 41.1 42.3
Days payable 35.8 37.7 34.4 36.2 37.3
Cash cycle 55.9 53.6 45.0 49.7 50.8
Source: Company data, Verdhana estimates

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Company profile
PT Cisarua Mountain Dairy (Cimory), established in 1993, produces premium dairy and premium consumer foods. The company has positioned its
novel products in the premium market by focusing on product quality and unique offerings. Cimory Squeeze (pouch yogurt), Kanzler Singles (ready-
to-eat sausage), and UHT milk with unique flavors are just three examples. The company went IPO in 2021. Cimory currently has 6 factories, 1
distribution center, distribution branches, and 80 distributors which distribute the company’s product to 33,000 MT channels, 50,000 GT channels,
and 2,700 MCMs. The current controlling shareholder is the Sutantio family.

Valuation Methodology
We derive our TP of IDR4,330 using the DCF method. Our DCF was based on 11.6% WACC and 3.0% terminal growth assumption. This implies
27.2x P/E 2023F.

Risks that may impede the achievement of the target price

Key risks are worse than expected competition environment especially competitors that enter the market with much lower price, raw material prices
fluctuation, risks of changes in business strategy, and product safety issues.

ESG
Cimory is strongly committed to its ESG efforts to better the lives of Indonesian citizens, and at the same time achieve long-term sustainability and
success. In terms of environment and energy, Cimory has put an effort in order to reduce the maximize the usage of energy, water, and waste.
Cimory also provide an opportunity for local dairy farmers and housewives. They provide training to their local dairy farmers in order to further
enhance the productivity and quality of milk, thus giving Cimory the best quality of milk. Cimory also provides economic benefit opportunities for
housewives through their Miss Cimory program.

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Investment Thesis
CMRY is one of the fastest growing FMCG companies under our coverage; we estimate
such strong growth will endure in the medium term, on the back of three main growth
boosters: 1) fast growing market, 2) agility and quality, and 3) expansion in distribution.
CMRY’s key product categories (yogurt, UHT milk, fresh milk, and processed meat) have
low penetration in a market experiencing material growth in recent years where product
innovations are indulging increasingly health-conscious consumers and facilitating the in-
home consumption trend. This translates to much potential upside to grow. CMRY is in a
good position to capture this demand driven market by its capability in high quality product
innovations, reflected by its numerous unique SKUs, and agility to dominate markets with
its first mover initiatives, especially in the premium categories. Interesting to note is that
the Company has a different approach to its competitors in promotion strategy by fully
focusing on the digital platform. This strategy has been proven effective in luring young
affluent consumers.
We reckon that the biggest growth contributor would come from distribution expansion;
CMRY has large opportunities to boost sales volume by just adding new points of sales,
especially in general trade and direct-to-consumer channels, given its low base effect. We
also note that the Company’s unique direct-to-consumer model as well as established
cold chain infrastructures create higher barriers to entry for new competitors. Hence, we
foresee CMRY sales CAGR of 34.5% in 2021-2023 (vs. 8.3% FMCG CAGR in 2021-
2023). Profitability-wise, CMRY has superior margins compared to other dairy companies
by commanding higher ASP in addition to a better product-mix, which could cushion them
against increases in raw material prices. We foresee CMRY NPAT to increase by 30.2%
CAGR 2021-2023 (vs. 17.4% FMCG CAGR 2021-2023).
We valued CMRY by using the DCF method, giving us a target price of IDR4,330/share,
which implies 27.2x PE 2023F. Our DCF was based on 11.6% WACC and a 3.0%
terminal growth assumption. We also applied a PE multiple as a sanity check. Our
comparable peers for PE benchmark are dairy companies and FMCG companies in
Indonesia and regional countries, as >65% of CMRY sales are from dairy products.

Fig. 1: WACC assumption and DCF model

WACC Assumption Terminal Growth 3%

Risk Free Rate 6.0%
Equity Risk Premium 6.9%
Beta 0.82
Cost of Equity 11.6%
Cost of Debt 9.0%
Aft tax Cost of Debt 7.1%
Weight of Debt 0.7%
Weight of Equity 99%
WACC 11.6%
2022F 2023F 2024F 2025F 2026F 2027F 2028F 2029F 2030F 2031F
EBITDA 1,308 1,750 2,275 2,632 2,965 3,529 4,199 4,955 5,798 6,725
Tax Expense 277 357 462 520 591 704 837 988 1,156 1,341
Capex 877 524 1,066 150 150 150 150 150 150 150
Change in WC (166) (191) (214) (139) (151) (159) (167) (175) (184) (193)
FCFF 321 1,061 961 2,101 2,375 2,834 3,379 3,992 4,675 5,427
Terminal Value 64,850
Discount Factor 0.90 0.80 0.72 0.64 0.58 0.52 0.46 0.42 0.37 0.33
Discounted FCFF 287 851 691 1,354 1,371 1,465 1,565 1,657 1,738 23,410

Value of Firm 34,390

Value of Debt 27
Value of Equity 34,363
# of Share Outstanding 7.9
FV per Share 4,330

Source: Bloomberg, Verdhana

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Fig. 2: Peers Comparison

Market Cap P/E Ratio EV/EBITDA GPM OPM NPM ROE
Ticker Security Name
(USDmn) 2022F 2023F 2022F 2023F 2022F 2022F 2022F 2022F 2023F
Regional Peers
002946 CH EQUITY New Hope Dairy Co Ltd 2,015 27.4 20.6 14.9 12.1 25.4 4.9 4.3 15.0 16.7
600597 CH EQUITY Bright Dairy & Food Co Ltd 2,695 22.7 20.1 8.9 7.1 25.6 4.6 2.4 10.6 10.8
600887 CH EQUITY Inner Mongolia Yili Industrial 38,091 22.9 19.7 16.3 14.1 36.8 10.1 8.7 27.1 27.8
2319 HK EQUITY China Mengniu Dairy Co Ltd 22,549 22.6 18.9 17.5 15.1 37.8 6.4 6.3 15.4 16.4
VNM VN EQUITY Vietnam Dairy Products JSC 7,868 17.2 16.1 11.2 10.4 44.1 19.9 17.3 33.2 35.1
DLM MK EQUITY Dutch Lady Milk Industries BHD 506 24.2 20.4 15.5 14.2 n.a. 9.4 7.7 42.4 39.3
2267 JP EQUITY Yakult Honsha Co Ltd 8,601 20.9 19.7 11.3 10.9 59.3 12.7 10.3 9.5 9.4
2264 JP EQUITY Morinaga Milk Industry Co Ltd 2,454 11.1 11.5 6.4 6.2 27.7 6.5 4.9 9.5 9.4
2270 JP EQUITY Megmilk Snow Brand Co Ltd 1,264 9.9 9.5 4.9 4.8 23.2 3.7 2.4 6.3 6.2
Weighted Average 86,041 21.7 18.8 15.0 13.1 38.7 9.8 8.5 21.3 22.1
Indo Peers under Our Coverages - - - - - - - - -
CMRY IJ Equity Cisarua Mountain Dairy Tbk 1,700 24.9 19.3 15.9 11.6 46.3 25.1 19.9 18.6 20.6
ICBP IJ EQUITY Indofood CBP Sukses Makmur Tbk 7,023 13.1 12.0 9.6 8.8 39.2 22.7 12.7 21.9 21.1
INDF IJ EQUITY Indofood Sukses Makmur Tbk PT 3,920 7.8 7.5 6.2 5.9 33.8 16.6 7.0 15.1 14.4
KLBF IJ EQUITY Kalbe Farma Tbk PT 5,224 24.3 23.5 15.5 14.5 44.5 15.3 11.9 14.8 14.2
MLBI IJ EQUITY Multi Bintang Indonesia Tbk PT 1,196 34.8 29.2 15.4 13.5 55.7 34.8 25.8 19.9 34.7
MYOR IJ EQUITY Mayora Indah Tbk PT 3,358 21.1 16.1 12.9 9.6 27.6 10.0 7.4 17.8 22.0
ROTI IJ EQUITY Nippon Indosari Corpindo Tbk P 555 24.8 23.0 14.7 14.2 55.8 9.5 8.9 10.2 10.8
SIDO IJ EQUITY Industri Jamu Dan Farmasi Sido 1,894 22.9 20.1 16.8 14.8 56.1 34.8 28.2 34.1 36.7
ULTJ IJ EQUITY Ultrajaya Milk Industry & Trad 1,240 13.9 12.7 9.3 8.6 36.0 23.1 19.3 20.9 18.3
UNVR IJ EQUITY Unilever Indonesia Tbk PT 11,144 24.4 23.7 17.7 17.3 50.6 20.1 15.6 121.8 117.9
Weighted Average 35,552 19.9 18.5 13.6 12.6 43.5 19.8 13.8 51.4 50.8

Source: Bloomberg, Verdhana

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Major risks that could undermine our thesis

Competition risk in yogurt and UHT milk
Yogurt is the biggest chunk of CMRY’s sales, accounting for 48% of 6M21 sales. In our
view, increasing competition might not severely hamper the growth in the near term as
CMRY still has the luxury to enhance sales volume by adding point-of-sales and product
distribution in low penetrated channels like general trade and direct-to-consumer
channels. On top of that, we think the competition situation will remain manageable at
least in the coming two years. We are not worried about existing competitors so far as
they are competing in a same level playing field in terms of pricing and quality; moreover,
the number of players is also small relative to other categories.
ULTJ (ULTJ IJ; HOLD) is a potential new competitor with plans to launch long-life yogurt
products (9-12 expiry date months vs. incumbent’s short-life yogurt at 3-4 months) with
carton packaging in 2022. This type of product will enable them to expand through
ambient distribution. However, this might not become a significant threat as it will not be
head-to-head competition with CMRY products for two reasons. Historically ULTJ tends to
be quite conservative in terms pf pricing and promotion strategy. Secondly, long-life
yogurt products and short-life yogurt have different product images and perceived health
benefits. Other players like ICBP (ICBP IJ; BUY) may also be re-entering the market,
backed by its dairy facilities; however, similar to ULTJ, we do not see that ICBP could
exert significant disruption through pricing and promotion.
We actually are more concerned about more aggressive players like Wings and Mayora
entering the yogurt market with extremely low pricing and combative promotion, which
may change the competition landscape. Moreover, both companies also have established
cold chain infrastructures that include chillers, which might help them penetrate the
market faster. However, we do not think this will happen in the near future as both
Companies are currently focused on developing its milk category. Note that both of them
have just entered the drinking milk market in 2020. On top of that, both Wings and Mayora
still see the market size for yogurt to be relatively small. Meanwhile, we do not think
multinational companies like Frisian Flag and Nestle would have the luxury to expand into
the yogurt category given their business rigidity.
Meanwhile, for UHT market, the biggest threat is the potential entry of Chinese players
like Yili and Mengniu. We are also worried should Wings continues to subsidize its low-
price products in longer-run; not to mention if they could enhance their production
capacity faster. These potential risks might hamper CMRY growth as management
expects that UHT milk would perform the fastest growth going forward. Note that
management targets to increase milk division sales contribution from 19% to 30%.
We are also aware that CMRY is currently highly dependent on the modern trade
channel, which contributes around 55% of sales. There are possible risks of their products
losing chiller space to other products. Shelf-space contracts are usually reviewable every
six months, and modern trade prioritizes sales turnover performance over pricing rate
offered by principals for shelf-space contract decisions. Therefore, good sales
performance would mitigate the risk of losing shelf space to competitors for CMRY.

Food safety risks

Any food safety issue could lead to a significant negative impact, for instance sales
discontinuation or even criminal charges, in addition to bad publicity for CMRY. Ensuring
adherence to health and safety standards throughout the whole distribution process and
when products are in-store, is key to eliminate exposure to this risk. Thus, finding suitable
outlets, especially in general trade, is of paramount importance.

Raw material price fluctuations

Raw materials and packaging costs contribute to around 71.5% to COGS or equal to
42.3% of total sales in 2020. Raw materials is the largest cost component so far which
accounts for 53.6% of COGS or equal to 31.7% of sales. Thus, any raw material price
fluctuation would have a direct impact on earnings. In terms of cost sensitivity, we reckon
every 1% change in raw milk powder price could affect EPS movement by 0.7%,
assuming all else being equal.

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Risks of changes in business strategy

Any change in Company strategy may exert a significant impact on business outlook. For
instance, should the company decide to enter the upstream business (i.e., dairy farm) or
to invest in the hospitality business that would require a lot of capex as well as exposure
to uncertainties in growth outlook. Our view is that the likelihood of this risk occurring is
quite small.

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Cimory group – The secret of growth

PT Cisarua Mountain Dairy (“CMRY”), established in 1993, produces premium dairy and
premium consumer foods. CMRY currently focuses solely on the downstream business.
CMRY is one of the fastest growing FMCG companies under our coverage. We foresee
CMRY sales CAGR of 34.5% in 2021-2023F (vs. 8.3% average peers’ sales CAGR 2021-
2023F). In our view, CMRY has three important growth drivers: 1) fast growing market, 2)
agility and quality, 3) distribution expansion. In this report, we will try to gauge each of
CMRY’s growth drivers.

Fig. 3: CMRY vs. other FMCG companies under our coverage – Fig. 4: CMRY vs. other FMCG companies under our coverage –
1H21 Sales growth 1H21 NPAT growth

140% 700%

115% 579%
120% 600%

100% 500%

80% 400% 347%

60% 300%
42%
40% 200%
19% 22%
20% 13% 100%
7% 19% 21% 33%
1% 0% 8%
0% 0%
-5% -1%
-20% -7% -7% -100%
UNVR ROTI ULTJ KLBF SIDO MYOR ICBP MLBI Cimory ICBP MYOR UNVR KLBF ULTJ SIDO ROTI MLBI Cimory

Source: Company data, Verdhana Source: Company data, Verdhana

Fig. 5: CMRY vs. other FMCG companies under our coverage – Fig. 6: CMRY vs. other FMCG companies under our coverage –
Sales CAGR 2021-2023 NPAT CAGR 2021-2023

40% 40.0% 37.4%

36.1%
34.5%
35% 35.0%
30.2%
30% 30.0%

25% 25.0%

20% 20.0%

13.0% 15.0% 13.3%

15% 11.4% 11.8%
11.8%
9.8%
9.6% 10.0%
10% 7.9% 8.6%
6.7% 7.0% 6.2%
5.0% 3.6%
5%
1.5%
0.0%
0%
UNVR KLBF ULTJ ROTI ICBP SIDO Cimory MYOR MLBI
UNVR MLBI KLBF ULTJ ICBP ROTI SIDO MYOR Cimory

Source: Company data, Verdhana Source: Company data, Verdhana

Fast growing market

CMRY sales breakdown in 6M21 consists of yogurt (48%), drinking milk – UHT and fresh
milk (19%), and processed beef, chicken, and seafood (33%). All of these categories
possess large potential growth given their low market penetration. We see three factors
behind the acceleration of consumption for these categories in recent years 1) increasing
healthy lifestyle habits, 2) product innovation and 3). practicality.
• Liquid milk (including yogurt) – the next big thing
In our view, liquid milk (UHT milk, fresh milk, and yogurt & sour milk) is the most
lucrative category in the food and beverage industry right now, simply due to two
key factors: low penetration and consumption acceleration. Based on
Euromonitor data, the liquid milk sales growth trajectory consistently showed
double-digit growth over the past five years. UHT milk remains the biggest sales
contributor in the liquid milk segment, while the yogurt category experienced the
fastest growth. In contrast, the fresh milk market has been much smaller, in our
view, due to raw material and distribution challenges. According to Kantar
Worldpanel, both UHT milk and yogurt products have very low market
penetration so far, with Ultra Milk as the biggest UHT player (45.4%) and Cimory
as the biggest yogurt player (21.1%) . The liquid market in Indonesia is relatively
young in comparison to China’s which has already reached 90% penetration.
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Moreover, our industry check revealed that ~75% of UHT milk and yogurt are
sold in Java, indicating plenty growth opportunities in other regions.

Fig. 7: Dairy companies product penetration rate level (%)

90 82
80
70 66

60 53
50 46 45 45 45
40 34
30
30 23 21 20 18 17
20 16 14 13 12 11 10
10
-

Source: Kantar, Verdhana

We identified three key factors that could accelerate liquid-milk consumption. First
and foremost is improvement in household income. We note that milk is a
nutritious drink which should be a primary need among the young population in
Indonesia; unfortunately, the products are not affordable for all income classes.
Secondly, the development of healthy lifestyle habits could be a preliminary trigger
for people to consume milk. Lastly, the most important factors are product
innovation and distribution expansion. We learned that health benefits alone are
not enough, attractive sensory factors are needed to lure Indonesian consumers to
consume more. As a result, we see more players offering various product flavors
and textures, dominated mostly by sweet flavors. We also see an increasing
number of players which has enlarged the availability of products as well.
In addition, we observe that the growth of liquid milk consumption is also driven by
the shifts in consumption, in particular, from powder milk and sweet-condensed
milk. Consumers tend to choose liquid milk on the back of three major reasons,
such as 1) practicality, 2) attractive flavor choices, and 3) health benefits. Such a
robust growth outlook will naturally attract more companies to enter in the future.
However, we do not think there will be a long-term price war situation as most of
the raw material cost structure is standardized to some extent. But, we do think
competition will trigger higher A&P rollouts, a similar trend that occurred for
decades in China’s dairy market.

Fig. 8: Liquid milk sales breakdown, including yogurt (IDRtn) Fig. 9: Liquid milk growth (UHT, fresh, yogurt CAGR 2016-2020)

25.0 23.5
18.0%
21.8 16.5%
2.0
19.7 1.3 16.0%
20.0 17.5 1.0 14.0%
15.5 0.9 12.3%
15.0 0.7 12.0%
14.7
14.1
12.7 10.0%
11.2
10.0 9.8 8.0% 7.4%

0.9 0.9 6.0%

5.0 0.8 0.9
0.8
5.5 5.9 4.0%
4.2 4.6 5.1
- 2.0%
2016 2017 2018 2019 2020
0.0%
UHT Milk Fresh Milk Flavored Milk (UHT) Yogurt UHT Milk Fresh Milk Yogurt

Source: Euromonitor, Verdhana Source: Euromonitor, Verdhana

9
Verdhana | Bukalapak 06 December 2021

Fig. 10: Indonesia vs. other countries – GDP per capita Fig. 11: Indonesia vs. other countries – Dairy consumption per
Comparison (USD) capita (kg/annum)

12,000 40
10,500 35.3
10,402
35 32.0
10,000
30
25.4
8,000 7,189 25

6,000 20
16.0
3,870 14.0
15
4,000 3,299
2,786
10 7.9
1,901 6.0
2,000
5

- 0
India Vietnam Philippines Indonesia Thailand Malaysia China Indonesia Philippines India Malaysia Thailand Vietnam China

Source: World Bank, Verdhana Source: Euromonitor, Verdhana

Fig. 12: China’s dairy growth by segment Euromonitor (USDbn) Fig. 13: Indonesia dairy consumption by segment (USDbn)

60 20% 4.0 70%

18% 61%
49.6 18% 3.5 3.4
50 16% 60%
16%
3.0 2.7
14% 50%
40
12% 2.5
10% 33% 40%
29.1 1.9
30 10% 2.0
23.1 1.6
10% 7% 25% 1.5 30%
20.5 8% 1.5
18.3
20 8% 16.3 15 6% 15% 1.0 20%
1.0 0.7 13% 0.7
8.6 8.7 7.6 4% 9%
10 5% 5.4 0.4 0.4 10%
4.8 4.2 3.2 0.5 15%
2.1 2% 0.2 0.2 0.1
1.6 0% 0.0 12% 0.1 0.1
0 0% - 0%
Dairy Yogurt Spoonable Drinking Milk Flavoured UHT White Fresh White Dairy Yogurt Spoonable Drinking Milk Flavoured UHT White Fresh
Yogurt Yogurt Milk Milk Milk Yogurt Yogurt Milk Milk White Milk
2010 2020 CAGR (RHS)
2020 2025F CAGR (RHS)

Source: Euromonitor, Verdhana Source: Euromonitor, Verdhana

• Ultra-high temperature (UHT) milk – the most affordable category

In terms of sales, UHT milk is the biggest category in the liquid milk segment, on
the back of its affordability and availability. Historically, in comparison to fresh
milk, UHT milk’s ingredient has been cheaper (imported raw milk powder price is
usually ~20% lower than local fresh milk), enabling companies to set affordable
pricings. UHT milk also can be stored in room temperature, making it easier to be
distributed through ambient distribution (vs. fresh milk through chilled
distribution). On top of that, UHT milk does not have return rate risk as the shelf
life is very long, ranging between 9 – 12 months. Within this category, small
packaged flavor milk has the largest product portfolio so far, while family pack
products have started to gain popularity due to the recent cooking at home trend.
With the largest consumer base as well as cheaper expansion costs, the UHT
milk market is more fragmented than other categories.

Fig. 14: Total UHT milk sales (IDRtn) Fig. 15: ULTJ and ICBP dairy sales growth
25.0 20%
15.8%
20.6
19.6 13.7%
15% 12.2%
20.0 17.8
15.8 9.1%
10% 7.1%
14.0 6.6% 6.2%
15.0 7.6%
14.7 4.1%
14.1 5% 3.0%
12.7
10.0 11.2
9.8 0%
-4.1%
5.0
-5%
4.6 5.1 5.5 5.9
4.2
- -10%
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 9M21

UHT Milk Flavored Milk (UHT) ICBP Dairy Ultrajaya

Source: Euromonitor, Verdhana Source: Company data, Verdhana

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Verdhana | Bukalapak 06 December 2021

• Yogurt – healthy products that appeal to senses

Yogurt, in particular drinking yogurt, is the fastest growing category within the
dairy industry. Consumers tend to choose drinking yogurt products, mainly due to
its practicality, wide flavor choices, and cheaper price points compared to
spoonable yoghurt. We found that the reason for consuming yogurt is not only
driven by the health benefit factor (i.e. digestion aid), but more importantly due to
the sensory factor. Going forward there might be a shift in paradigm where
yogurt is consumed for pleasure (snacking) rather than for health benefits, which
would multiply consumption frequency. In the long-run, we see that yogurt
consumption in Indonesia (currently 8.5% contribution to liquid milk category)
could mimic the same trend observed in China (32% contribution to liquid milk
market).
We believe that chilled and frozen products like short-life yogurt can command
higher price points, given its superior taste and nutrition content in comparison to
ambient distribution products. On top of that, more innovations in flavor, texture,
and product formats will be the main impetus driving the premiumization trend.
Note that yogurt price points in Indonesia could reach 60-70% above the prices
of UHT milk, similar to those in China. Theoretically, this makes the yogurt
market less price sensitive than UHT milk, given the premium target market. In
terms of ingredients, yogurt can be made with 100% imported raw powder milk.
Hence, with a similar cost structure to UHT milk coupled with high pricing points,
yogurt could generate substantially thicker margins. However, for short-life yogurt
needs more expensive distribution channels through chilled storage, and has a
shorter shelf life of around 3 months.

Fig. 16: Indonesia’s dairy market structure Fig. 17: China’s dairy market structure (by retail sales)
Yogurt
Cheese Others
8%
1% 1%
UHT Milk
25%

Yogurt
32%

Fresh Milk
4%

Drinking Milk
66%

Flavored Milk
(UHT)
63%

Source: Euromonitor, Verdhana Source: Euromonitor, Verdhana

• Fresh milk – promising demand, limited supply

Fresh milk has higher price points than UHT milk products and as a result, a
much smaller market base. Although fresh milk offers more health benefits than
UHT milk, product expansion activities from suppliers have been limited. A lack
of local fresh raw milk and distribution challenges compared to UHT milk are the
main reasons behind this stagnancy. The lack of local fresh raw milk means
more expensive raw material costs in comparison to UHT milk. We observe three
structural issues in Indonesia that contribute to the limited local raw milk supply
1) scattered dairy farming (inefficient and ineffective production), 2) operational
constraints (limited land, expensive feed cost, lack of expertise), and 3) culture
(e.g. farmers selling their cows for festive celebrations). Distribution of fresh milk
requires chilled storage and thus product availability is limited to certain modern
trade channels. Due to these barriers to growth, we do not foresee the size of the
fresh milk market to surpass that of UHT milk as has happened in western
countries

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Verdhana | Bukalapak 06 December 2021

Fig. 18: Indonesia total fresh milk sales (IDRtn) Fig. 19: Indonesia vs. other countries – milk production
(th tonnes)
1.0 1,000.0
906.0
900.0
1.0 0.9
0.9 800.0
0.9 700.0
0.9
600.0

0.9 0.8 500.0

0.8 400.0
0.8
300.0
194.8
200.0
0.8
100.0 35.9
1.4 1.6
0.7 -
2016 2017 2018 2019 2020 Thailand Indonesia China India World

Source: Euromonitor, Verdhana Source: OECD, Verdhana

• Processed beef, chicken, and seafood – practical and comfort food

Given its pricing, processed meat, chicken, and seafood are generally
considered as premium products in Indonesia. These products need chilled
distribution channels which means that they are generally sold in urban areas
only. The popularity of frozen food has increased significantly during the
pandemic as more consumers cook at home. Once the impact of the pandemic
fades, demand might normalize at a favorable growth level as we predict some
consumers will stick to the in-home consumption habit. We believe more product
innovations could boost consumption as well. Consumption per capita for
processed meat, chicken, and fish is still relatively low in Indonesia. The
consumption should increase simultaneously with household income
improvement as well as chilled storage expansions.

Fig. 20: Indonesia meat consumption per capita vs other countries

2020 Beef Consumption (Annualy, kg/capita) 2020 Poultry Consumption (Annualy, kg/capita)
9.0 8.3 60.0
8.0 7.6 49.3
50.0
7.0
6.0 5.4 40.0
5.0
4.2 30.0
3.9
4.0
3.1
17.7 18.7
3.0 20.0 16.5
2.2 13.7 14.2
2.0 1.2
1.2 10.0 7.9 7.9
1.0 0.5 2.5 3.5

- -
India Korea Thailand Indonesia Philippine Saudi China Malaysia Japan Vietnam India Saudi Thailand Indonesia Philippine China Vietnam Japan Korea Malaysia
Arabia Arabia

Source: OECD, Verdhana

Agility and quality

CMRY is a very agile FMCG company, proven by its first mover initiatives and dominant
market share. We also like the Company’s market positioning in the premium segment,
focusing on quality and consumer experience, which differentiates them from competitors.
The Company also took the bold step to solely focus on digital advertisement and
promotion channels. This strategy is fitting for its young affluent consumers, who are
digital natives attuned to social media. Competition wise there will be inevitable risk in
the future. However, despite increasing competition, CMRY still has many opportunities to
sustain its strong double-digit growth, driven by its low market penetration advantage,
product innovation initiatives, and substantial distribution expansion. In this young market
condition, presence of new players with expanding product choices is also important to
accelerate consumer consumption. In this section, we will discuss further about CMRY’s
product innovation strategy and competition landscape.
• Yogurt – first mover advantage and thicker margin
Yogurt is the biggest chunk of CMRY sales for now. There are good reasons as
to why CMRY should be focusing on this category: 1) first mover advantage
(largest market share – 72% in spoonable yogurt and 50% in drinking yogurt

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Verdhana | Bukalapak 06 December 2021

market), 2) strong potential demand (extremely low market penetration), and 3)

thicker margin (GPM at ~50% vs. UHT GPM at 30-40% - due to high ASP). To
put it into perspective, based on our observation, CMRY has rolled out the
largest number of SKUs in the yogurt category at 33 SKUs (vs. 9 SKUs peer
average). CMRY was also the first in the market to introduce new flavors,
textures, and product formats (i.e. yogurt squeeze – pouch yogurt), which has led
to impressive sales growth of 23.8% in 2020. The Company is still focused on
developing short-life yogurt products as it has better product image and health
benefits than long-life yogurt, making it more suitable for the premium market.
Interesting to note is that CMRY has plans to launch a longer life yogurt product
next year in the form of a yogurt stick which can be stored at room temperature,
making it easier to distribute (ambient distribution). Moreover, the price points
would be cheaper (~IDR2,000) which might attract a larger consumer base,
especially the middle-low-income class.

Fig. 21: CMRY yogurt number of sku vs others Fig. 22: CMRY yogurt sales (IDRbn)
35 33 900.0
824.1

30 800.0 751.1

700.0 665.8
25
600.0 570.5
20
500.0
15 14
400.0
11 11 319.8
10 300.0
7
6
200.0
5
2
100.0
0
Cimory Heavenly Greenfields KIN Dairy YoyiC Yoforia Delicyo -
Blush 2018 2019 2020 1H20 1H21

Source: Company data, Verdhana Source: Company data, Verdhana

Fig. 23: CMRY drinking yogurt photo Fig. 24: CMRY pouch yogurt photo

Source: Verdhana Source: Verdhana

With regards to competition, the situation currently remains manageable. So far,

we have not seen any indications of a price war; even a giant Chinese Company
such as Mengniu has entered the Indonesian market with reasonable prices.
Competition risk is indeed inevitable; however, we do not foresee an onslaught of
competition as most of the companies we interviewed have stated that they still
see yogurt as a relatively small market for now. We also see barriers to entry to
the yogurt category to be quite high, especially for short-life yogurt products, as
not only production facilities but also cold chain infrastructures (i.e. chilled
storage) are required.
Although source of ingredients (mostly imported skimmed and whole milk) is
relatively easy to access, manufacturing yogurt needs specific production
facilities and product formulation; hence, we think only diary companies would
have the capability to develop this category. We think companies like ULTJ and
ICBP are better positioned to enter the market sooner than others on the back of
their experience in this market a couple of years ago. Meanwhile, we do not think
other multinational companies like Nestle and Frisian Flag have the luxury to
enter the market swiftly due their rigidity.
Our conversation with ULTJ revealed that they plan to enter the drinking yogurt
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Verdhana | Bukalapak 06 December 2021

market next year. Interestingly, the product will be a long-life yogurt drink (9-12
months) with carton packaging, which will enable them to sell through ambient
distribution. We believe the quality of the product would be formidable; however,
we observe that companies like ULTJ and ICBP are historically conservative in
terms of promotion and pricing strategy.
On the other hand, we would be more concerned should Wings and Mayora
group decide to enter the yogurt market as we predict they might come with
predatory pricings and aggressive promotion strategies. In addition, both
companies also have strong chiller infrastructures as well, which might help them
to penetrate the market faster.

Fig. 25: Drinking yogurt price comparison Fig. 26: Food yogurt price comparison (incl, pouch)
(in IDR) (in IDR)
83.0 235.0
40,000 90 50,000 250
35,000 80 45,000
63.1 70 40,000 200
30,000 59.3
60 35,000
25,000 44.0 46.5 30,000 126.8 150
43.0 50 111.2
36.4 38.0 104.0 23,500
20,000 36.0 25,000 92.0
40 81.3 83.3
15,000 23.8 12,625 20,000 100
30 13,000 13,900 12,675
9,000 9,100 9,500 8,600 8,800 9,300 8,900 8,300 15,000 10,000
10,000 9,200
20 10,000 6,500 50
5,000 1,500 10 5,000
- 0 - 0

Price Price/ml (RHS) Price Price/ml

Source: Alfagift, KlikIndomaret, Verdhana Source: Alfagift, KlikIndomaret, Verdhana

• Ultra-high temperature (UHT) milk – Key products to unlock general trade

channel
UHT milk may grow faster than other CMRY categories going forward. Management
expects for the milk division sales contribution to increase significantly from 19% to
30%. CMRY positions their UHT milk products at higher price points than
incumbents (referring to ULTJ, Frisian Flag, and ICBP). What differentiate CMRY’s
products from competitors is their unique flavor offerings, in our view. We learned
that CMRY’s ingredient mix is similar to the industry formulation, consisting of 80%
imported powder milk and 20% local milk. This category will help CMRY’s expansion
plan into ambient distribution which could provide a larger market base in
comparison to other key categories like yogurt and processed meat. CMRY also has
a fresh milk portfolio. However, the contribution is lagging behind other categories
due to a smaller customer base as well as relatively less attractive cost structure.

Fig. 27: Cimory UHT flavors vs. others Fig. 28: CMRY milk sales (IDRtn)
14 13 400.0 378.4
12
12 350.0
305.0
300.0
10
8 250.0
8
191.6
200.0
6 5 5
150.0
4 97.5
3 100.0

2 1 50.0

0 -
Cimory Frisian Flag Ultra Milk Greenfields Indomilk Clevo Milo 2018 2019 2020 1H21

Source: Company data, Verdhana Source: Company data, Verdhana

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Verdhana | Bukalapak 06 December 2021

Fig. 29: Cimory UHT photo Fig. 30: Cimory fresh photo

Source: Verdhana Source: Verdhana

UHT milk is the most fragmented market in the dairy industry, having the largest
market base (cheapest price amongst liquid milk segment) as well as being relatively
easy to enter (minimum hurdles to get imported powder ingredients and suitable for
ambient distribution). Many new players have entered the market in the past five
years, most of them positioning their products at higher premium prices than
incumbents, offering more local fresh milk composition and better packaging design.
This strategy is reasonable as new competitors do not want to have head-to-head
competition with incumbents due to 1) a high brand equity barrier which requires
them to spend expensive opex for market share and 2) standardized cost structure
limits them to have lower pricing strategy.
Interesting to note is that that in the recent quarters, new players like Wings Group
(Milku brand in 3Q20) and Orang Tua Group (Milkido brand in 1Q21) came with
more aggressive approaches to earn market share by offering prices much cheaper
than incumbents. However, we do not think such low prices will be sustainable,
given that current high raw material prices. Note that the raw material structure for
UHT milk is standardized, for instance most of players formulate 80% raw milk
ingredients using imported skimmed/whole milk. Therefore, there is limited room for
ingredient reformulation. For Wings and Orang Tua Group, there are only two
options to maintain their low-price strategy, either to keep subsidizing the price or to
lower the product quality. According to our industry survey, currently both companies
still lack scale, and there is the possibility that the current expensive raw milk price
could hinder their capacity expansion.
Despite increasing competition, the UHT milk market still provides plenty room for
growth, backed by its low market penetration. To put it into perspective, even old
incumbents like ULTJ could still grow at double digit sales growth level this year.
This is underpinned by the increasing health conscious and in-home consumption
trends. In the long run, UHT milk volume growth could be driven by market
expansion into lower-tier cities in Java, and also outer Java areas. Note that
currently 75% of diary sales are derived from Java alone, based on our channel
checks.

Fig. 31: UHT price comparison Fig. 32: Fresh milk price comparison
(in IDR) (in IDR)
38.9
15,000 35 50,000 40
29.0 29.7
13,000 45,000
26.2 26.8 27.0 30 30.0 30.8 35
24.5 24.8 25.0 25.2 40,000 29.5 36,800
11,000 26.4 30
25
19.5 20.0 35,000 30,000 30,750
9,000 29,500
20 30,000 25
15.0 15.0 6,200 6,700 6,750 25,000
7,000 5,900 5,800 5,350
5,000 4,900 5,000 15 25,000 20
5,000 3,900 20,000
3,000 3,000 2,900 15
10
3,000 15,000
10
1,000 5 10,000
5,000 5
-1,000 0
- 0
Diamond Milk Life KIN Greenfields Brookfarm
Price Price/ml (RHS) Price Price/ml (RHS)

Source: Alfagift, KlikIndomaret, Verdhana Source: Alfagift, KlikIndomaret, Verdhana

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Verdhana | Bukalapak 06 December 2021

• Processed meat – practicality

CMRY is focusing on providing high quality consumer food products (processed
beef, chicken, and seafood) in order to cater to the premium market. We notice
that CMRY’s processed meat is gaining popularity under its strong brand name
Kanzler, especially with its new ready-to-eat sausage called Kanzler Singles.
CMRY just recently launch more innovative products like ready-to-eat meatballs.
Despite its higher price (31.3% more expensive than peer average), demand for
its ready-to-east sausage keeps increasing; in addition to its practicality
advantage, the increasing in-home consumption trend is also supporting this
growth. Having high ASP products will help to boost both sales value and gross
margin level (currently processed meat GPM at 30% vs. 10% of peer average).
The competition is quite fragmented in this category; nonetheless, most players
are solely focused in the middle-income class segment. We also observe that, in
general, processed food companies lack innovations and offer similar product
features in the market. We think this is a very smart strategy of CMRY’s to avoid
direct head-to-head competition in the middle-to-low segment.

Fig. 33: Kanzler singles photo Fig. 34: CMRY consumer food sales growth
700 659.422

600
533.401 525.614
500
418.922
400

300 277.239

200

100

0
2018 2019 2020 1H20 1H21

Source: Verdhana Source: Company data, Verdhana

Fig. 35: Ready to eat sausage price comparison (IDR) Fig. 36: Cimory market share in processed meat
10,000 Others
12%
9,000 8,700

8,000 7,350
Cimory Group Company A
7,000 10% 36%
5,900
6,000

5,000

4,000

3,000
Company C
2,000 20%
1,000

- Company B
Kimbo So Good Kanzler 22%

Source: Alfagift, KlikIndomaret, Verdhana Source: Euromonitor, Verdhana

Monetizing distribution channel opportunities

CMRY has a formidable distribution network through its subsidiary PT. Macrosentra
Niaboga (MN). MN distributes CMRY products to modern trade (~38,000 outlets), general
trade (~50,000 outlets), and Miss Cimory channels (~2,700 women) via 80 distributors as
per 1H21. The Company has also developed food service industry, export, and e-
commerce channels (e.g., Grab Kitchen and Grab Food). Modern trade, general trade,
Miss Cimory (direct-to-consumer), food service industry, and exports contributed 53%,
24%, 12%, 10%, and 1%, respectively in FY20. The Company plans to invest further to
expand capacity and distribution channels through its IPO proceeds. Hence, we might see
a significant increase in the number of point-of-sales from a low base, which will directly
translate to better sales volume. This strategy should be the biggest growth contributor for
CMRY in the medium term. We also want to highlight that CMRY has minimal related
party transactions, in our view, as its subsidiaries (especially its distribution arm) are
consolidated (99.9% stake).
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Verdhana | Bukalapak 06 December 2021

Fig. 37: Flow of products

Modern
Indomaret (18,000 stores)
Trade
Alfamart (15,000 stores)
Channel

General
Distribution Trade 50,000 stores
Center: Channel
Sentul
2,700 Agents, 115 Centers,
Miss Cimory and 200,000
Factory (Sentul, household/week
Semarang,
Pasuruan, Cikupa) Private labels for
Food Service
restaurants, cinemas,
Industry
hotels, etc
Branches: Sentul,
Jakarta, Bandung,
Cirebon, Semarang,
China (2020), Philippine
Yogyakarta, Export
Surabaya, Malang, (2021)
Bali

Online Grab Kitchen and Grab Food

Source: OECD, Verdhana

• Miss Cimory
CMRY has a strong competitive advantage through its exclusive direct-to-
consumer (D2C) sales channel called Miss Cimory, enabling them to have better
interactions with consumers to promote their products. This door-to-door selling
business model helps to educate and influence consumer consumption habit,
especially for new product categories. This sales channel is also very effective as
most Miss Cimory agents already have a customer base (households, housing
communities, offices, and hospitals), that matches CMRY’s premium product
pricing. CMRY management have stated that they will invest additional effort to
develop this channel, aiming to enhance its sales contribution significantly from
12% to 30%.
Miss Cimory has been in operation since 2013, mainly covering the Java, Bali,
and South Sumatra regions. CMRY has employed >2,700 agents (local mid-low-
income women) as of 1H21, serving >200K households on a weekly basis and
with minimal return rate. CMRY management claim that they want to increase
the number of salesforce from 2,700 agents in 6M21 to 7,500 in 2024F. CMRY
will also try to optimize the sales generated by each agent
(IDR139mn/agent/annum in 2020) by digitalizing and supplying more SKUs (i.e.,
UHT milk, yogurt squeeze and Kanzler Singles) to agents so that each agent can
cover more households (from 73 houses/week in 6M21 to 101 houses/week in
2024F). Increasing the number of agents might not be a difficult task for now
since CMRY offers a favorable take-home monthly pay of around IDR5mn/agent
on average or equal to ~30% of Miss Cimory sales (including bonuses). This
figure is higher than the minimum-wage, which is very effective in recruiting
agents. Our channel check, revealed that each agent is able to generate
~IDR500K sales/day, similar to figures achieved by ROTI (ROTI IJ, Neutral)
agent as well.
Developing D2C model like Miss Cimory is not an easy task as it requires a
comprehensive system. Currently, CMRY has 115 Miss Cimory centers across
30 cities in Java, Bali, and Sumatra, which act as a community hub for training,
earnings collection, and distributing compensation and bonuses. To put it into
perspective, it took CMRY almost 8 years to amass 2,700 agents, while Yakult,
spent 10 years to build its pool of 1,000 agents, known as the Yakult Ladies. This
indicates that the D2C business model is hard to replicate. The Yakult Lady sales
force currently consists of >10K agents, contributing 50% to Yakult sales in
Indonesia - note that Yakult alone generates ~IDR6tn sales/annum, which shows
that the D2C model has tremendous potential for growth in sales. We also note
some risks that could hinder the growth of Miss Cimory, such as potential
inconsistent performance from agents, slower than expected recruitment process
and a higher agent attrition rate.

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Verdhana | Bukalapak 06 December 2021

Fig. 38: Miss Cimory expansion (agents and centers) Fig. 39: Miss Cimory house coverage (households)
8,000 350 800,000 750,000
312
7,000 300 700,000
6,000 230 250 600,000
5,000 500,000
165 200 500,000
4,000
7,500
125 150 400,000 350,000
115
3,000
5,500
100 300,000
2,000 4,000 225,000
3,000 200,000
2,509 2,731 50 200,000
1,000
1,511
1,053
- 0 100,000
2018 2019 2020 1H21 2021F 2022F 2023F 2024F
-
MCM Agents MCM Centers 1H21 2021F 2022F 2023F 2024F

Source: Company data, Verdhana Source: Company data, Verdhana

• General Trade
CMRY has a presence in around 50K outlets in general trade, or equal to 1%
penetration, (assuming a total of 3mn general trade outlets nationwide)
providing much room to grow. CMRY aims to expand its general trade network
from 50K in 6M21 to 150K in 2024F. Notwithstanding, we think that the
expansion will not that be straightforward as not all outlets are able to handle
dairy products, nor suitable for CMRY’s premium pricing. To put it into
perspective, an experienced dairy company like ULTJ chose to maintain only
70K outlets in general trade as they wanted to avoid any product safety risk.
CMRY also plans to add more chillers from 2K in 6M21 to 70K 2024F (vs.
UNVR (UNVJ IJ, Neutral) and Coca Cola at 200K and 500K, respectively) to
support expansion in general trade. Alongside this expansion, CMRY also
plans to develop room temperature products like yogurt stick which will be
suitable for ambient distribution. Note that the management aims to increase
general trade contribution from 24% to around 30%.

Fig. 40: GT outlets expansion (units) Fig. 41: Chiller expansion (units)
160,000 150,000 80,000
70,000
140,000 70,000

120,000 110,000 60,000

100,000 50,000
40,000
80,000 75,000 40,000

60,000 50,714 30,000

42,523
40,000 20,000 15,000

20,000 10,000
2,000
- -
2018 1H21 2022F 2023F 2024F 1H21 2022F 2023F 2024F

Source: Company data, Verdhana Source: Company data, Verdhana

• Modern Trade
CMRY is fully covered in modern trade channels, having a presence in each of
the 38K outlets. Indomaret and Alfamart are the biggest contributors ~41% in
1H21 for total sales (vs. 21% in 2018), after gaining substantial shelf space amid
weakening competition during the pandemic. Shelf-space contracts is usually
reviewed every six months where modern trade prioritizes sales turnover over
pricing rate, based on our channel check with retailers. Hence, as long as CMRY
sales perform well, its presence would not be easy to dislodge. The growth in
modern trade channels might be slower than other channels due to limited room
for expansion. Note that CMRY management expect that modern trade sales
contribution could decrease from 53% in 1H21 to 30%.

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Verdhana | Bukalapak 06 December 2021

Fig. 42: Number of modern trade outlets Fig. 43: Sales proportion minimarket vs. other channels
100%
90%
80%
70% 59%
69%
60% 79% 77%
50%
40%
30%
20% 41%
31%
10% 21% 23%
0%
2018 2019 2020 1H21

Alfamart & Indomaret Other Channel

Source: Company data, Verdhana Source: Company data, Verdhana

Fig. 44: MT and GT growth Fig. 45: Minimarket outperform supermarket

15.0% 13.7%
12.3%
11.6%
9.4%
10.0%
7.9%
6.6% 6.4%

5.0%
2.8%

0.0%
-1.0%
-5.0% -3.4% -3.3% -2.9%
-4.2%

-7.0%
-10.0%
2015 2016 2017 2018 2019 2020 1H21

Supermarket/Hypermarket Minimarket

Source: Nielsen, Verdhana Source: Nielsen, Verdhana

• Food Service Industry, e-commerce, and export

CMRY also sells its products to quick-service restaurants, cinemas, hotels, etc.
in the form of food ingredients or customers’ private labels. The Company has
also started selling their products online, partnering with Grab under two
schemes: 1) Grab purchases CMRY products and sells them on the Grabkitchen
platform, 2) consumers directly order CMRY products via the Grabfood platform
and have them delivered from the nearest Miss Cimory centers. The growth for
this channel might be significant in the medium term due to low base effect, but
limited in size. In our view, the export channel might be a bigger source of
potential sales contribution. At present, the Company aims to expand into the
Philippine market, which has a similar food preference market to Indonesia’s.

Fig. 46: Export target Fig. 47: 1H21 sales breakdown by channel
6.0% Others
5%
5.0% Miss Cimory
5.0% 15%

4.0%

3.0%
MT
2.0% 55%

GT
1.0% 0.7% 0.8% 25%

0.0%
2018 2020 2024F

Source: Company data, Verdhana Source: Company data, Verdhana

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Verdhana | Bukalapak 06 December 2021

Raw material price dynamics

CMRY is a company levered to movements in global milk prices—the Global Dairy Trade
(GDT) prices—with >40% of its total production cost (or >30% of its annual revenues)
coming from imported milk powders alone. As such, we believe investors should view
CMRY in conjunction with developments in the global dairy markets as well. We project
that every 1% change in milk price could exert about 0.7% impact to earnings.
According to FAO, 2020 global milk production is estimated at about 906mn tonnes
annually, with the largest producers from India (~194.8mn tonnes), Europe (~176.7mn
tonnes), and the USA (~101.3mn tonnes). New Zealand, despite ranking 9th in terms of
production volume (~21.9mn tonnes), is one of the largest exporters of dairy products
globally. When speaking of exports, both Europe and New Zealand often come under
media spotlight (Australia to a lesser extent). New Zealand exports 85% of its annual milk
production overseas, making up roughly 25% of the country’s total exported goods
annually.
In contrast, Europe only exports ~10% of its produced dairy products annually (with most
of it being consumed domestically via cheese products), and yet it is the largest exporter
globally at 32% share—highlighting Europe’s sheer production size in the dairy sector.
Major dairy exporters from Europe are Netherlands, France, Germany, Belgium, Poland,
and Denmark.
With regard to imports, there are 14 countries (including Indonesia) that make up ~55% of
global imports. The top 5 major importing nations are China, Russia, Mexico, Japan, and
the USA. China imports roughly 2mt annually, while Russia’s stands at 1.4mt. It is
estimated that these two countries account for around 20% of total global import share.

Fig. 48: Top milk production by countries (mn tonnes) Fig. 49: Top milk import by country (mn tonnes)
1,000.0 90.0
906.0
900.0 77.6
80.0
800.0 70.0
700.0 60.0
600.0 50.0
500.0 40.0
400.0
30.0
300.0 16.9
194.8 20.0
176.7
200.0
101.3 10.0 3.9 3.7 3.3 3.1
100.0 57.7 36.8
-
- World China Russian Mexico Algeria Indonesia
World India EU US Pakistan Brazil Federation

Source: FAO, Verdhana Source: FAO, Verdhana

Fig. 50: Top milk export by countries (mn tonnes) Fig. 51: Top milk consumption by country (mn tonnes)
90.0 1,000.0
904.9
78.7
80.0 900.0

70.0 800.0

700.0
60.0
600.0
50.0
500.0
40.0
400.0
30.0
22.4 300.0
19.9
194.7
20.0 200.0 155.2
12.1
91.2
10.0 4.4 100.0 58.0
2.7
- -
World EU New Zealand US Belarus Australia World India EU USA Pakistan

Source: FAO, Verdhana Source: FAO, Verdhana

In short, GDT prices have increased significantly in the past couple of quarters. Currently,
global price is reaching local fresh milk price level at USD3,600/ton (vs. 20% discount
historically). The price trajectory might raise further due to higher feed costs. We also note
many farmers are pursuing an efficiency strategy by reducing supplement for cows which
also lower the production yield. On top of that, demand remains steady where China is
increasing its imports to compensate for domestic supply disruption. We predict such high
prices could persist until 1H22.
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Verdhana | Bukalapak 06 December 2021

Domestically, Indonesia’s dairy farming sector is under-developed due to the following

factors : 1) scattered groups of farmers leading to production inefficiency, 2) inadequate
land/pastures (around 1 hectare of land is needed for 2-3 dairy cows), 3) farmers prefer to
sell their cows to earn bigger profits rather than milking the cows. Our view is that the
prospects for dairy farming in the country will not be an easy ride. This is due to the fact
that Indonesia has a warmer climate (>25 degree Celcius) versus regions well-known for
dairy farming such as New Zealand. To illustrate, dairy cows under the management of
small-scale farmers (who keep their cows outside), typically yield around 15
litres/day/head of milk vs New Zealand’s 23 litres/day/head. Furthermore, with the lack of
pastural land (for cows to graze outside—which would yield cost advantage) in Indonesia,
this would imply dairy farmers need to take their cows inside the barn and purchase feed
as input. Feed typically consists of corn, soy, and other agricultural products (depending
on the ratios each farmer chooses for his/her herd), of which Indonesia has been
importing from overseas. Purchasing feed as a means of input for the dairy cows would
mean higher cost versus the conventional pastural grazing, and there can be little interest
from existing dairy farmers to take on such task. This is not to mention that small, local
dairy farmers typically think on a practical, day-to-day basis: If beef prices are shooting up
the roof, farmers will be more inclined to cull rather than rear their cattle. The lack of beef
supply in the country has convinced many dairy farmers to cull their cattle prematurely—
thus challenging the outlook for the long-term development of dairy farming in Indonesia.

Fig. 52: Skim milk and whole milk price (USD/ton)

7,000

6,000

5,000
3,915
4,000

3,000 2,620
3,580

2,000
2,270
1,000

-
Jun-11

Jun-12

Jun-13

Jun-14

Jun-15

Jun-16

Jun-17

Jun-18

Jun-19

Jun-20

Jun-21
Feb-13

Feb-21
Feb-11

Feb-12

Oct-12

Feb-14

Feb-15

Feb-16

Feb-17

Feb-18

Feb-19

Feb-20

Oct-20
Oct-11

Oct-13

Oct-14

Oct-15

Oct-16

Oct-17

Oct-18

Oct-19

Oct-21
Skim Milk Powder Whole Milk Powder

Source: Bloomberg, Verdhana

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Verdhana | Bukalapak 06 December 2021

Digital-focused marketing strategy

Starting in 2020, CMRY has fully shifted its advertisement towards the digital platform, on
applications such as Instagram, Youtube, and TikTok. This strategy fits with CMRY’s
target market of young and affluent groups. This group of consumers is attuned to social
media and probably spend more time on their smartphones rather than television. Note
that CMRY has engaged with ~200 social media influencers across several platforms. All
digital marketing initiatives are done in-house, a marketing strategy that enables the
Company to respond rapidly to new competition or to pursue new consumption trends.

Fig. 53: CMRY ads photo

Source: TikTok, Youtube, Verdhana

Fig. 54: CMRY ads photo Fig. 55: CMRY digital marketing performance indicators

Posts Views (mn)

Media
FY20 1H21 FY20 1H21
TikTok 195 998 2297.6 8688.7
Instagram 191 38 1.1 2.9
Youtube 114 187 163.7 222.9

Source: Instagram, Verdhana Source: Company data, Verdhana

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Verdhana | Bukalapak 06 December 2021

Financial forecast
Sales forecast: higher consumption frequency, product, innovation,
agility to dominate market, and distribution penetration
CMRY has a strong track record from the past three years, recording 31% CAGR sales
over 2018-2020, backed by both dairy (34% CAGR) and consumer foods (25% CAGR).
Interesting to note is that the Company is still able to post 34% y-y sales growth amid the
pandemic in 2020, underpinned by a significant jump in sales in 2H20 (+53% growth vs.
1H20), a strong growth trend that continued in 1H21 (+40% growth vs. 2H20). Most of the
growth was driven by volume on the back of three main growth boosters 1) fast growing
market - substantial increase in consumption frequency for dairy and processed food, on
the back of a low base effect as well as in-home consumption trend, 2) agility and quality
– new quality product launches that quickly become big hits like Kanzler Singles, UHT
milk, and pouch yogurt coupled with its digital marketing strategy, and 3) distribution
expansion - gaining significant shelf space in the modern trade channel amid weakening
competition during the pandemic.
In our estimates, sales will continue to grow strongly with CAGR 2021-2023 reaching
34%. We think consumption in dairy and processed food will increase along with product
innovations. We also reckon that additional distribution networks in the form of Miss
Cimory and general trade outlets will be significant to drive the growth, given its low base
effect. The Company will add new production lines in 1Q22, which will enable CMRY to
meet unmet demand. Lastly, the potential of sales generated by innovative new product
launches like the yogurt stick (suitable for lower middle-income class and ambient
distribution), 1-L UHT milk format (riding on cooking-at-home trend), and RTE meatballs
(higher demand due to in-home consumption trend). All in all, most of CMRY growth will
continue to be driven by volume, especially from UHT milk (new production capacity and
ambient distribution advantage).

Fig. 56: Sales and sales growth 2018-2023 Fig. 57: Sales CAGR 2021-2023
7,000 110% 35.5%
6,481
93% 35.1%
6,000 90% 35.0%
4,934
5,000 34.5%
70% 34.5%
4,000 3,584
38% 50%
3,000 34% 31% 34.0%
28%
1,862 30%
2,000 1,391 33.4%
33.5%
1,087
1,000 10%
33.0%
- -10%
2018 2019 2020 2021F 2022F 2023F
32.5%
Total Revenue (IDRbn) Sales Growth (RHS) Total Revenue Dairy Consumer Foods

Source: Company data, Verdhana Source: Company data, Verdhana

Fig. 58: Sales volume and ASP breakdown forecast

5,500 22,090 22,500 60,000 65,000
Dairy Consumer Foods
21,657 22,000
4,500 4,146 50,000 56,588 57,154 60,000
56,027
21,500 54,929
40,868 55,000
20,824
3,500 3,137 21,000 40,000
20,270 20,500 31,759 50,000
2,273 46,679
2,500 19,832 30,000
20,000 43,884 23,410 45,000
19,365
1,500 1,203 19,500 20,000
857 12,005 40,000
668 11,427
19,000 9,546
500 10,000 35,000
18,500
-500 2018 2019 2020 2021F 2022F 2023F 18,000 - 30,000
2018 2019 2020 2021F 2022F 2023F

Volume (kg) ASP (IDR/kg, RHS) Volume (kg) ASP (IDR/kg, RHS)

Source: Company data, Verdhana

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Verdhana | Bukalapak 06 December 2021

Margins forecast: product mix, raw milk price fluctuations, and

more efficient opex
CMRY’s raw material costs contribute of around 80% of COGS or equal to 40% of sales in
1H21. Raw materials constitute the largest cost of 31% of 1H21 sales, while packaging
cost make up around 10% of 1H21 sales. Similar to other dairy players, CMRY relies
heavily on imports for its raw and packaging materials, making them directly affected by
foreign currency fluctuations.
Whole milk powder forms the biggest chunk of raw material costs as it could make up
around 80% of total dairy costs. The Company usually purchases 6 months in advance
with forward contracts in order to avoid logistical disruptions. CMRY also buys local fresh
milk (20% of dairy cost) from local cooperatives in Java with the price depending on the
quality. It is common practice for dairy companies to use more imported powder milk as
the price is normally cheaper (~20% discount based on our estimate) than local fresh
milk. We also note that CMRY purchases sugar from local importers with 3-6 months
forward contracts. Meanwhile for the consumer food segment, CMRY’s biggest cost is
chicken (75% of meat costs), while 25% of meat cost is derived from raw beef imported
from Australia with 6-months forward contracts.
In the past two years, CMRY has managed to significantly expand it gross margin level
from 39% in 2018 to 48% in 1H21. This was mainly due to high ASP and better product
mix. We note that more a favorable product mix has been able to cushion the Company’s
gross margin amid a surge in commodity prices this year. Going forward, we forecast the
gross margin to slightly decrease next year to 46% due to ongoing expensive raw milk
prices and increasing fixed costs from new production lines. On top of that, we reckon
higher sales contribution from UHT milk (lower margin) might lower blended GPM as well.
Hence, we still foresee for a conservative GPM level in 2023 albeit we might see a raw
material prices to subside, as well as potential cost efficiency from cost-saving initiatives
such as shifting the source of yogurt pouch packaging to in-house manufacturing instead
of importing from China. We do not see commanding substantial price increases would be
feasible as we predict competition might get tougher.

Fig. 59: GPM 2018-2023 forecast Fig. 60: GPM 1H21 comparison with peers
50% 60.0% 56.2%
47.9% 53.7% 54.7%
48% 47.4% 50.8% 52.2%
46.3% 46.3% 47.9%
50.0%
46%

44%
40.0% 35.8% 37.0%
42% 40.8%
30.2%
40% 38.6% 30.0%

38% 37.2%
20.0%
36%

34%
10.0%
32%

30% 0.0%
2018 2019 2020 1H21 2021F 2022F 2023F MYOR ULTJ ICBP Cimory UNVR MLBI KLBF ROTI SIDO

Source: Company data, Verdhana Source: Company data, Verdhana

CMRY’s opex accounted for 18.4% of 1H21 sales, consisting of selling & marketing
(16.4% of sales) and general and administrative expense (2% of sales). Advertising &
promotion (A&P) made up the largest selling & marketing cost at around 6.8% to 1H21
sales. The trend of opex declining as percentage of sales will continue as sales growth
continues to outpace expense growth. We foresee A&P to sales might increase in 4Q21
in order to anticipate larger production capacity in 1Q22. Thus, we estimate EBIT CAGR
of about 38.7% in 2021-2023.

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Verdhana | Bukalapak 06 December 2021

Fig. 61: 1H21 A&P to sales ratio comparison with peers Fig. 62: Operating profit growth 2019-2023
14.0% 120%
12.0% 104%
12.0% 99%
100%
10.0% 9.2%
80% 74%
7.5% 7.6%
8.0% 6.8%
6.6%
5.7% 60%
6.0%

4.0% 3.2%
2.6% 40%
30% 29%
2.0% 23%
20%
0.0%
ULTJ ICBP UNVR MLBI Cimory ROTI KLBF SIDO MYOR
0%
2019 2020 1H21 2021F 2022F 2023F

Source: Company data, Verdhana Source: Company data, Verdhana

Fig. 63: NPM margin 2018-2023 Fig. 64: Net profit growth 2019-2023
25.0% 350%
23.0% 321%
20.8%
19.9% 19.5% 300%
20.0%
250%

15.0% 200%

9.5% 150%
10.0%
7.7% 7.8%
100%
64%
5.0% 50% 32%
29% 29%

0%
0.0% 2019 2020 2021F 2022F 2023F
2018 2019 2020 1H21 2021F 2022F 2023F

Source: Company data, Verdhana Source: Company data, Verdhana

Capital expenditure, working capital, and debt

Due to its stronger than expected demand, especially for its new products like UHT milk,
Kanzler Singles, and yogurt pouch, CMRY is now facing capacity constraints. The
Company claimed that they can only deliver 68% of orders received in 1H21, which caps
performance upside. CMRY plans to double its capacity for both yogurt pouch and UHT
milk in order to cater to unmet demand. The Company also will increase its production
capacity for Kanzler Singles by more than 60%.
CMRY capex is split in 2022 and 2024, mainly to solve capacity constraints in 2022F.
Capex will be used for 2 new warehouses and additional lines for dairy (adding capacity
by 3.6x) and consumer food (adding capacity by 2.4x) in 2024F. The Company has also
set aside capex for distribution channel expansion, such as for supporting general trade
expansion by rolling out around 70K chillers by 2024F (vs. 3K chillers in1H21).
CMRY’s balance sheet is in net cash position, with minimal interest-bearing debt. The
Company stated that they will keep its low gearing ratio to anticipate uncertainty amid the
pandemic and will not take loans for future expansions. We also note that the
management plans to pay dividend at a minimal 30% payout ratio starting 2022F, given
its strong balance sheet

Fig. 65: Dairy production’s utilization rates Fig. 66: Consumer food production’s utilization rates
140,000 100% 40,000 70%
90% 60%
120,000 87% 35,000 60%
73% 80%
79% 50% 51%
100,000 63% 62% 65% 30,000 48% 33,670
70% 70% 50%
56% 56%
80,000 60% 25,000
43% 46%
50% 24,853 40%
60,000 36% 20,000 22,634
108,857 117,506 40%
18,938 30%
40,000 30% 15,000
71,749
59,370 60,635 20% 20%
20,000 44,274 46,421 10,000 12,005
32,956 10% 11,427
9,546 10,103
- 0% 5,000 10%
2018 2019 2020 1H21 - 0%
Designed Capacity (tonnes) Production Volume (tonnes) 2018 2019 2020 1H21

Blended UR (%, RHS) Yogurt UR (%, RHS) Designed Capacity (tonnes) Production Volume (tonnes)
Milk UR (%, RHS) Blended UR (%, RHS)

Source: Company data, Verdhana Source: Company data, Verdhana

25
Verdhana | Bukalapak 06 December 2021

Fig. 67: Capex rollout until 2024 Fig. 68: Capacity expansion until 2024
1,200 600,000
1,066 508,330
500,000
1,000 79,513
877 403,233
400,000
800 68,113
298,136
300,000
600 524 56,713

200,000 151,176 428,817

400 335,120
33,670 241,423
100,000
200 117,506
74 -
2021F 2022F 2023F 2024F
-
2021F 2022F 2023F 2024F Dairy Capacity (tons) Consumer Food Capacity (tons) Total Capacity

Source: Company data, Verdhana Source: Company data, Verdhana

26
Verdhana | Bukalapak 06 December 2021

Management structure
Board of directors
Farell Grandisuri Sutantio – President Director
Mr. Farell has been with Cimory since 2007 and has been the company’s President
Director since 2015. He earned his Bachelor of Commerce degree from The University of
Western Australia in 2006 and Master of Business Administration from Oxford University
in 2011. Prior to Cimory, he work as a consultant for Boston Consulting Group in 2011-
2012.
Axel Sutantio – Director
Mr. Axel has been with Cimory since 2010 and was appointed as Director in 2013. He
earned his Bachelor of Science degree from Curtin University of Technology in 2009.
Bharat Shah Joshi – Chief Financial Officer and Investor Relation
Mr. Joshi has been overseeing Cimory’s finance, strategy, and investor relations since
2021. He earned his BSc (Hons) in Mathematics, Operational Research, Economics, and
Statistics (MORSE) from University of Warwick in 2006. He is also a CFA charterholder.
Previously, he has worked as an analyst for Credit Suisse (2006-2007) and then for
Aberdeen Standard Investments as Fund Manager (2007-2015) and Investment
Director/Chief Investment Officer (2015-2021).
Yerki Teguh Basuki – Chief Operating Officer
Mr. Basuki has been in charge of Cimory’s operations since 2021. He earned his
Doctorate in Business Management from Bina Nusantara University in 2016. Prior to
Cimory, he was the Supply Chain and Operation director in PT Suntory Garuda
Beverages from 2016 to 2021 and held several leadership positions in PT Coca-Cola
Amatil Indonesia from 1995 to 2016.
Arjoso Wisanto – Chief Sales Officer
Mr. Wisanto was appointed as Cimory’s Sales Director in 2021. He earned his Bachelor
and Master of Science from Delft University of Technology in 1989. Prior to Cimory, he
was the General Manager Contract Manufacturing Services for PT Multipolar Corporation
(1989-1993), National Sales Manager of Sanyo Group (1993-1996), and Supply Chain
Managing Director at PT Artha Boga Cemerlang (Orangtua Group) from 1996 to 2010.
Martua Parmingotan Sihaloho – Finance Director
Mr. Sihaloho was appointed as Cimory’s Finance Director since in 2021. He graduated
from STIE Indonesia in 2004, majoring in accounting. Prior to Cimory, he held several
positions in PT Unilever Indonesia Tbk (2006-2018), was Head of Commercial Finance
and Sales Finance in Kraft Heinz Indonesia (2018-2019), and Vice President Finance
Business Partner of Lazada Indonesia (2019-2020).
Board of commissioner
Bambang Sutantio – President Commissioner
Mr. Bambang is the founder of Cimory and father to Mr. Farrell (President Director), Mr.
Axel (Director), and Mr. Wenzel (Commissioner). Prior to Cimory, he was Sales Engineer
for Fuehrmeister’s Jakarta Rep. Office (1986-1987) and one of the co-founders of PT
Macro Chemica Trada (1987-1989).
Wenzel Sutantio – Commissioner
Mr. Wenzel has been with Cimory since 2015. Prior to Cimory, he was working in
Business Development division of PT Indosoya Suber Protein (2013-2015) and
Investment Banking Associate of PT Avantgrade Lumbung Sejahtera (2015-2017).
Alexander S. Rusli – Independent Commissioner
Mr. Rusli was appointed as Cimory’s Independent Commissioner in 2021. He is currently
serving as the Independent Commissioner of PT Linknet Tbk, PT Unilever Indonesia Tbk,
and PT Medikaloka Herminta Tbk. He serves as Commissioner at PT Solusi Sinergi
Digital Tbk.

27
INVESTMENT RATINGS
A rating of ‘Buy’, indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of
‘Neutral’, indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of
‘Reduce’, indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of
‘Suspended’, indicates that the rating, target price, and estimates have been suspended temporarily to comply with applicable
regulations and/or firm policies. Securities and/or companies that are labelled as ‘Not Rated’ or ‘No Rating’ are not in regular
research coverage. Benchmark is Indonesia Composite Index (‘IDX Composite’). A ‘Target Price’, if discussed, indicates the
analyst’s forecast for the share price with a 12-month time horizon, reflecting in part of the analyst’s estimates for the company’s
earnings, and may be impeded by general market and macroeconomic trends, and by other risks related to the company or the
market in general.

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