Asia Food & Properties

9 April 2009


Asia Food & Properties (AFP) is part of the stable of companies owned by the powerful Widjaja family in Indonesia. Its chairman Franky Widjaja is the son of the Indonesian tycoon Eka Tjipta Widjaja, who founded the conglomerate Sinar Mas Group.

The Widjaja family is also connected to local tycoon Oei Hong Leong, who is the son of Eka Tjipta Widjaja. Described as a maverick and a raider by the media, Oei Hong Leong has built a reputation for astute investments, including aggressive takeover bids of listed companies.

Besides AFP, the Widjaja family also owns Golden Agri-Resources and Asia Pulp & Paper, both of which are also listed in Singapore.

Actually, AFP used to own Golden Agri-Resources, which it sold off in 2006 as part of a capital reduction exercise. AFP's revenue since then has been much lower.

But it still owns a property division in Jakarta, where it claims to have one of the largest land banks. In China, it is a property developer, hotel owner and noodle manufacturer. AFP also has country club and hotel operations in Singapore and Malaysia. Its Indonesian property business is its main revenue contributor.

Trading volume for AFP is very low. It was heavily traded from mid-2003 to mid-2004, but volumes spiked only when AFP disposed of its stake in Golden Agri in 2006.

AFP's revenue for FY2008 fell 9.4% to S$797.5million while net profit rose to S$123m compared to S$7.2m in FY2007.

AFP's profit was bolstered by two factors. It recorded an exceptional gain of S$24m related to the dilution of its effective interest in PT Bumi Serpong Damai Tbk on the Indonesia Stock Exchange in June 2008.

AFP also recorded a foreign exchange gain of S$34.8m, primarily from the yen strengthening against the the US dollar. This gain was partially offset by weakened Indonesian rupiah to the US dollar.

With a P/B of 0.36x, the stock looks cheap. Its P/E also looks cheap at 4.8x, which is below our usual criteria of 12x.

AFP did not reveal specific figures in its latest outlook statement for FY2008 and gave a general overview of its prospects. It expects the global economic downturn to lead to lower demand for its hotel rooms in China and its commercial properties to be affected by lower demand in the market as well.

More specifically, it said it would improve cost efficiencies for its Indonesian property business and continue targeting higher margin products to stay ahead in the highly competitive noodle market in China.

Its outlook statements for FY2007 and FY2006 were in the same vein and did not reveal any specific forecast figures.

AFP has not paid out dividends for the past two years.

It reported a free cashflow of S$107m compared to minus S$22.9m in FY2007.

The group scored a 43 on the Business Times Corporate Transparency Index.

Asia Food & Properties is one of the 98 constituents on the Russell Singapore Value Index.

The index gained only 3 pts, or less than 1%, for the week from April 3 - 10, from 1,102 to 1,105.

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