Kalbe Farma To Cancel All Treasury Stocks

Kalbe Farma: To cancel all treasury stocks and distribute Rp19 DPS (KLBF, Rp1,540, Neutral, TP: Rp1,275)

At yesterday’s AGM, shareholders gave the green light for KLBF to cancel its entire 3.9mn of treasury stocks, equivalent to 7.7% of its paid-up capital. Therefore, total outstanding shares post-cancellation would be reduced to 46,875mn from 50,780mn. The cancellation would have no financial impact to the company, but would be EPS accretive to shareholders given the lower paid-up capital. Our current EPS forecasts have nevertheless factored this cancellation into account.

KLBF also received approval to distribute Rp19/share of dividend (1.2% yield), equivalent to a 51% payout – in-line with its minimum 50% payout policy, but lower than FY12’s payout at 65% and our payout assumption of 60%.

KLBF also reiterated its Rp1-1.5tn capex plans for this year, which would be used to finance production capacity expansion across the board, as well as for its distribution arms. On a newspaper today, Mr. Vidjongtius (Corporate Secretary) was quoted saying that the company plans to acquire 4-5 companies operating in the consumer health and nutrition segment this year.

for Indonesia Market Summaries 21 May 2013