JAKARTA - PT Buyung Poetra Sembada Tbk (HOKI) recorded an increase in revenue in the first quarter of 2018 amid the implementation of highest retail price (HET) policy for rice.
Throughout the first quarter of 2018, HOKI recorded an increase of 9% in revenue to Rp 380,42 billion from Rp 348 billion in the same period last year. HOKI has also bagged a net profit of Rp 26,61 billion or an increase of 10% year on year (yoy).
Bahana Sekuritas analyst Michael Setjoadi asserts that as a premium rice producer, the HET policy largely affects HOKI positively. "The common perception is that HOKI's rice is expensive. But the price is cheaper now thanks to the HET implementation," Setjoadi said to Kontan.co.id.
According to him, the projection that HET implementation would grind the company's margin has not been proven in HOKI's performance throughout the first three months of 2018, an improvement from last year's profit margin in the same period at 6,9%.
However, Mr Setjoadi remains sceptical towards HOKI's strategy to sell its products online through e-commerce. "Even in developed countries the sales of staple goods online are not fully developed yet. Traditional and modern markets are still the most popular choices," he explained.
In his view, online sales of rice will be hampered by the expensive delivery cost because of the weight of rice. "Not all e-commerce businesses can provide free delivery incentives to customers," Setjoadi said.
Still, he remains confident that HOKI will continue to perform well throughout the year especially after it adds its production capacity with five-kilogram packages. He believes that the sales of HOKI rice will be dominated by the particular package. (MS)