PT WINTERMAR OFFSHORE MARINE Tbk-WINS signs Loan Agreement with DEG, member of KfW Bankengruppe, for USD 18 million to fund fleet expansion

21 June 2011

WINS has signed a 9 year loan with the German development finance
institution DEG - Deutsche Investitions- und Entwicklungsgesellschaft
mbH, for a total of USD 18 million to finance the company's fleet
expansion plan for 2011. The loan will be used to finance 3 offshore
support vessels in the higher value segment.
DEG, member of KfW Bankengruppe, is one of the largest European
development finance institutions. DEG invests in profitable projects
that contribute to sustainable development in all sectors of the
economy, from agribusiness to infrastructure and manufacturing to
services.
Since the company's IPO in November last year, WINS has taken
delivery 1 unit of Fast Utility Vessel, 2 units of Anchor Handling Tug
Supply, 1 Utility Vessel and expects to take delivery of another Fast
Utility Vessel and one Utility Vessel in June, while another 6 vessels,
including a Heavy Load Barge, another Fast Utility Vessel, and an

Bisi International: Company Visit -Volatile Margins

Company at a glance. Established in 1983 by the Charoen Pokhpand Group, Bisi International (BISI) is Indonesia’s largest producer of hybrid seeds for corn, rice, vegetables and fruit segmented to the domestic market. BISI also has a major role of producing pesticides and distributor of fertilizer. BISI has a strategic partnership with Monsanto, a globally exposed seed producer based in United States. Its 2010 revenue segments are corn seeds (34%), vegetable seeds (23%), pesticides (35%), rice (6%) and fertilizer (1%). 

·        Vertically-integrated seed production business model. BISI’s hybrid production is done by using contract-farmers’ land for producing its hybrid seeds. These hybrid seeds are then sold to agents spread throughout Indonesia. Domestic farmers mostly prefer to use hybrid seeds compared to conventional seeds as the hybrids are able to generate higher profits. In terms of cost, raw materials contribution to production cost in 2010 was 48%, a significant drop compared to 76% in 2009 as BISI has excess of inventory from the previous year to be sold. The hybrid seed industry remains attractive as low hybrid seeds usage in Indonesia is a precursor of better days to come. Indonesia uses only 59% of the corn land to plant hybrid seeds, on the flipside, neighboring countries such as Thailand uses 95% according to FAO stats. Strengthening the aforementioned fact, the Ministry of Agriculture sets a positive outlook for the corn seed hybrid usage market going forward, hence reducing the proportion of the conventional seeds (exhibit 2).

·         1Q11 gross profit hurts by weather disruptions. 1Q11 net profit reached IDR42bn (+65% q-o-q) mainly due to lower opex. However, sales declined 3% q-o-q on the back of lower sales volume as weather disruptions remain to hamper farmers to plant hybrid seeds. As the production weakens, BISI’s strategy was to cut down operation costs such as reducing selling agents. This can be reflected by the company’s 50% decline in opex to IDR37bn, enabling BISI to boost operating profit to IDR51bn (+172% y-o-y). According to the management, corn seeds production is expected to pick up in 2H11 assuming weather conditions would be better.

·        Volatile margins and expensive valuation. 2011 annualized net profit would be IDR169bn, translating to 28x 2011 PE, 22% premium to Its peers. BISI’s share price has increased 710% and 622% relative to JCI since its IPO, giving high multiples at this current stage. On a positive note, the