A Fundamental Analysis of PT KMI Wire & Cable Tbk (KBLI)

PT KMI Wire & Cable Tbk (KBLI) is one of Indonesia's leading manufacturers of wire and cable products. As a publicly listed company on the Indonesia Stock Exchange (IDX), it plays a crucial role in providing essential materials for the country's power infrastructure, telecommunications, and industrial sectors. For investors, a fundamental analysis of KBLI is vital to understand its financial health, market position, and future growth prospects. This article offers a comprehensive review of KBLI's business, financial performance, and key valuation metrics.

Company Overview and Business Segments

KMI Wire & Cable was established in 1974 and has built a strong reputation for producing a wide range of high-quality cables. Its core products are essential for both residential and commercial applications. The company's main business segments are:

Power Cables: This segment includes low, medium, and high-voltage cables used in electricity distribution and transmission networks. This is a critical market for KBLI, as demand is driven by government infrastructure projects, urbanization, and private sector construction.
Control and Instrument Cables: These are specialized cables used in industrial automation, process control systems, and machinery. This segment serves a diverse range of industries, including oil and gas, manufacturing, and mining.
Building Wires: These are the standard cables used for electrical wiring in residential and commercial buildings. Demand in this segment is directly tied to the health of the property and construction sectors.
Other Wires and Cables: KBLI also produces a variety of other products, including automotive wires, telecommunication cables, and special application cables.

The company's broad product portfolio and its long-standing relationships with major clients, including state-owned utility company PT Perusahaan Listrik Negara (PLN), provide a stable and reliable revenue base.

Financial Performance Analysis

Examining KBLI's financial statements reveals a company with a strong and consistent operational track record, though subject to fluctuations in raw material prices.

Revenue and Profitability:

Revenue: KBLI has consistently generated strong revenues. In 2024, the company reported a revenue of Rp 3.56 trillion, an increase from the previous year. The company's top-line growth is closely linked to government spending on infrastructure and the overall economic growth of Indonesia.
Net Profit: The company's profitability has been robust. KBLI reported a net profit of Rp 144.3 billion in 2024. While profitability can be sensitive to the price of copper and aluminum—its primary raw materials—the company has demonstrated effective management of these risks. The positive earnings trend is a good sign for investors.

Key Profitability and Efficiency Ratios:

Gross Margin: KBLI typically maintains a gross margin in the range of 10-15%. In 2024, the gross margin was approximately 12.5%. This margin reflects the competitive nature of the industry and the cost of raw materials.
Net Profit Margin: The net profit margin stood at around 4.05% in 2024. While seemingly low compared to some other sectors, this is considered a healthy margin for a manufacturing company in a highly competitive and material-intensive industry.
Return on Assets (ROA) & Return on Equity (ROE): KBLI's ROA and ROE demonstrate the company's ability to generate returns. The ROE was around 9.8% in 2024. A healthy ROE indicates efficient use of shareholders' equity to generate profit.

Valuation Metrics

Valuation metrics help determine if KBLI's stock is currently a good value.

Price-to-Earnings (P/E) Ratio: Based on its trailing twelve months (TTM) earnings, KBLI's P/E ratio is around 7.6x. This is significantly lower than the average P/E of the broader Indonesian market (IDX Composite), which often trades at around 15-20x. A low P/E ratio suggests that the stock may be undervalued relative to its earnings, making it an attractive proposition for value investors.
Price-to-Book (P/B) Ratio: KBLI's P/B ratio is approximately 0.65x. A P/B ratio below 1.0 indicates that the stock is trading below its book value, or the value of its net assets. This is another strong indicator that the stock could be undervalued, suggesting a margin of safety for investors.
Dividend Yield and Policy: KBLI has a history of paying dividends, making it an attractive option for income-focused investors. In 2024, the company paid a dividend of Rp 35 per share, which, based on its current stock price, translates to a dividend yield of approximately 2.9%. This consistent dividend payment reflects the company's financial stability and commitment to returning value to shareholders.

Key Strengths and Investment Considerations

Strengths:

Essential Product: Wires and cables are indispensable for all modern infrastructure, ensuring a stable and long-term demand for KBLI's products.
Strong Market Position: KBLI has a long-standing history and a strong reputation in the Indonesian market, with solid relationships with key government and private sector clients.
Favorable Macroeconomic Trends: The Indonesian government's continuous investment in infrastructure, including power generation and distribution, provides a significant and reliable driver of demand for KBLI's products.

Considerations:

Raw Material Price Volatility: The price of copper and aluminum can significantly impact KBLI's profitability. A sharp increase in these prices, if not passed on to customers, could squeeze margins.
Competition: The wire and cable industry in Indonesia is competitive, with both local and international players vying for market share.
Dependence on Infrastructure Projects: A slowdown in government or private sector infrastructure spending could negatively impact the company's revenue growth.

Conclusion

PT KMI Wire & Cable Tbk (KBLI) presents a compelling case for a fundamental investor. The company operates in an essential and non-cyclical industry, with strong demand drivers from government infrastructure projects and urbanization. KBLI's financial performance is solid, characterized by consistent revenue and profitability.

From a valuation perspective, the stock appears to be undervalued, with its low P/E and P/B ratios suggesting that the market has not fully appreciated its intrinsic value. The consistent dividend payments further enhance its appeal. While investors should be mindful of the risks associated with raw material price volatility, KBLI's strong fundamentals and favorable macroeconomic tailwinds make it a potentially attractive investment for those seeking a stable, long-term play on Indonesia's growth story.

A Fundamental Analysis of PT KMI Wire & Cable Tbk (KBLI)