Quantamental Investing to beat Benchmarks

A. Stotz Investment Research

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INKP (INKP IJ): Indonesia's Largest Paper Producer

INKP: Tight Supply and Good Demand Should Remain

INKP: Paper Producer Enjoys Stacking Demand

CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Equity Bottom-Up

Indah Kiat Pulp & Paper Tbk / Equity Bottom-Up

<ul>
<li>Good price momentum, low correlation with Western stock markets, and good growth in core profit relative to its sector</li>
<li>Indonesia’s largest pulp and paper-related products manufacturer by sales should continue to benefit from continued high pulp price due to tight global supply following a suspension of capacity by the Chinese</li>
<li>Asian demand should remain solid at a CAGR of 5% until 2018, while announced capacity expansions from global paper players aren’t expected until 2020, 88% of INKP’s sales were in Asia in 2017</li>
<li>INKP has shown strong improvement in gross profit margin and current PE is still undemanding relative to global peers</li>
<li>Risk: China ramps up supply, lower demand from downstream players</li>
</ul>


Good price momentum, low correlation with Western stock markets, and good growth in core profit relative to its sector
Indonesia’s largest pulp and paper-related products manufacturer by sales should continue to benefit from continued high pulp price due to tight global supply following a suspension of capacity by the Chinese
Asian demand should remain solid at a CAGR of 5% until 2018, while announced capacity expansions from global paper players aren’t expected until 2020, 88% of INKP’s sales were in Asia in 2017
INKP has shown strong improvement in gross profit margin and current PE is still undemanding relative to global peers
Risk: China ramps up supply, lower demand from downstream players


INKP (INKP IJ): Valuation Still Undemanding Relative to Global Peers