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Instant Noodles to Instant Success

Every year, more than 100 billion packs of instant noodles are consumed worldwide. That’s nearly 13 packs for every person on the planet.


But have you ever stopped, while enjoying that comforting bowl of instant noodles, to wonder how they got there?


In the year 2000, the Japanese Institute conducted a poll among a group of people in Tokyo, asking about the most significant invention that humanity had developed up until the twentieth century. The astonishing response was not robots or any other technological innovation, but rather instant noodles.


This sentiment isn’t limited to just their opinion but is shared across many nations. It is considered one of the greatest inventions in human history.


Source: Micoope

The inventor of instant noodles, Momofuku Ando, was inspired to create this food after seeing people lining up for a bowl of ramen noodles during the postwar era in Japan. His idea was to provide nutritious, easy-to-prepare, and accessible food for all that could help alleviate hunger in tough times. Out of this desire, instant noodles were born.


Source: Histclo


On August 25th, 1958, Ando introduced his idea to the market and began selling it through his company, Nissin.


Just in 1 year, Nissin’s instant noodle sales had exceeded 13 million packages. This trend continued to grow, with sales increasing steadily.


Until 1971, he unveiled his new product: instant cup noodles, significantly enhancing the dining experience for consumers. During the same year, Indofood, one of the biggest consumer product manufacturers in Indonesia, unveiled an instant noodle product with specifications akin to Ando’s noodles but marketed under a distinctive name—Indomie.

Source: Boombastis


Through strategic promotion within and beyond Indonesia, this company not only outperformed Nissin but also became the preferred brand for instant noodles. The market value of Indomie in 2022 reached USD 55 billion and is expected to exceed USD 82 billion by 2029.


This industry has significantly benefited the Indonesian economy through exports and employment opportunities for citizens. Moreover, it has emerged as an important source of soft power for Indonesia.


In 2021, a study published by an Indonesian researcher delved into Indonesia’s soft power diplomacy. The study illuminated Indonesia’s Indomie industry—its exports to more than 80 countries and the establishment of factories in various nations. These elements have empowered the government to leverage Indomie as a diplomatic tool in its international relationships.


As a member of the Salim Group, one of the wealthiest business conglomerates in Indonesia, ICBP remain the largest pillars of this group's businesses.


Despite the Rp 69 billion loss incurred by ICBP due to the impairment of forex losses from its associate (Dufil Nigeria), ICBP still managed to achieve impressive performance by recording a total revenue increase of 4.8% yoy, reaching Rp 67.1 trillion, with instant noodle sales contributing Rp 50.4 trillion. Earnings also saw a significant increase of 52.4% yoy, reaching almost Rp 7 trillion.



If we exclude the impairment losses, the core profit still grew by 27% yoy, mostly driven by higher sales volume, ASP, and lower input costs. This year, our analyst, Clara, predicts that the performance will be even better. One of the drivers is the high consumption of the Indonesian population in the election year, coupled with stable raw material prices.


The company itself targets top-line growth of around 8% and an EBIT margin of around 20% in 2024F. ICBP currently trades at 14.7x PE, significantly lower compared to its 10-year historical average of 21.1x. We maintain a BUY recommendation with a DCF-based TP of Rp 14,000 for ICBP, implying a 19.0x 2024F PE, assuming a WACC of 14.2% and terminal growth of 5%.

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