Indonesian Rice Producer Buyung Poetra Sembada to Build New Factory
Buyung Poetra Sembada, an Indonesia-based rice producer, plans to construct a new rice factory in South Sumatra in the second half of 2018, a project that will require IDR 100 billion (approx. USD $7.5 million) in investment. Buyung Poetra Sembada conducted an initial public offering (IPO) on the Indonesia Stock Exchange in June 2017.
F. Dion Surijata, Head of Investor Relations at Buyung Poetra Sembada, said the company is still seeking a strategic location for the new rice factory. The search is currently confined to the province of South Sumatra.
To finance the project, Buyung Poetra Sembada will use internal cash reserves as well as bank loans. When the company became a publicly-listed company in June 2017 it generated IDR 217 billion (approx. USD $16.2 million) by selling a 29.79 percent stake in the company to the public.
Currently, Buyung Poetra Sembada already owns two factories, one in Subang (West Java) with a 30 tons per hour capacity, and one in Cipinang (Jakarta) with a 5 tons per hour capacity. The new rice factory should have a capacity of 30 tons per hour. The raw rice material that is used for all its factories (padi) originates from West Java, Central Java, East Java, South Sumatra and South Sulawesi. However, the company is seeking different sources for raw material with more competitive prices.
Related to the construction of the new factory, Buyung Poetra Sembada has already set up a new subsidiary - Astha Beras Perkasa - that is active in rice processing and distribution. This unit was set up in December 2017.
In 2018 Buyung Poetra Sembada targets to see a 11-12 percent (y/y) increase in sales. However, the company is negatively affected by government policy and therefore expects to see its gross profit margin slide to the range of 13-15 percent this year, while its net profit margin is expected to slide below 10 percent. In order to control rice price inflation and boost people's purchasing power, the government implemented the Highest Retail Price (HET) for consumers, meaning a cap on selling prices of rice.
Buyung Poetra Sembada has five brands (Topi Koki, Rumah Limas, Belida, BPS, and Hoki), all are packaged (premium) rice products. The company also delivers rice for supermarkets' and convenience stores' private labels (for example for Hypermart, Giant, Lotte Mart, Superindo, Tip Top, Naga Swalayan, and Yogya).
Stock Quote Buyung Poetra Sembada - HOKI:
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