PT Avia Avian Tbk (hereinafter referred to as 'Avia Avian') was successfully listed on December 8, 2021, raising a total of 772 million US dollars at an issue price of IDR 930 per share.
During the process of listing in Indonesia, Frost & Sullivan mainly undertook the following tasks: helping the company accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the company's competitive advantages, assisting the company, investment banks, and other intermediaries in completing the writing of relevant parts of the prospectus, facilitating communication with the Indonesian Stock Exchange and investors, helping investors quickly understand the market ecosystem and competitive landscape, and assisting the company in responding to various industry-related questions from the Indonesian Stock Exchange.
Indonesia Paint and Coating Industry Market Overview
Introduction
The paint and coating market is mainly divided into two parts: decorative paints and coatings, and non-decorative paints and coatings.
Among them, decorative paints and coatings refer to paints used for decorative purposes on new and existing buildings. Decorative paints are commonly used for decorating the interior and exterior surfaces of buildings (wall paint), decorating wooden and metal surfaces (wooden and metallic paint), protecting surfaces from rainwater or any other liquids (waterproof paint), protecting roof surfaces (roof coating), and other miscellaneous purposes.
Non-decoration paints and coatings mainly include automotive repair paint, non-decoration wood preservation paint, non-decoration roof paint, non-decoration instant cement, protective paint, and marine paint, etc.
Industry chain
The industrial chain of the Indonesian paint and coating market mainly includes the following participants:
Raw material sideThe upstream of the paint and coating industry's industrial chain begins with the production of petrochemical derivatives and mineral extraction, usually carried out by large companies. Large chemical companies use these raw materials to produce resins.
production sideIndonesia's pigment, resin, and additive manufacturers include both local companies and multinational ones. The integration level between Indonesia's resin manufacturers and paint and coating producers is very low.
Channel side:
Indonesia's domestic decorative coatings sales mainly occur through retail channels, which include goods moving from manufacturers to distributors, then to retail distributors, or directly from manufacturers to retail distributors and finally reaching consumers (including individuals, project owners, and contractors). Project owners and contractors can also obtain the necessary goods directly from distributors, who offer discounts through bulk orders. Many large paint and coatings manufacturers in Indonesia also own retail outlets or franchise stores. Indonesia has more than 140 direct sales centers for decorative coatings, over 100,000 retail stores, and more than 15,000 dyeing machines. The retail channel uses these direct sales centers, retail stores, and dyeing machines to supply paint and coatings products to consumers.
In terms of non-decoration coating sales, coatings and coating manufacturers tend to sell products directly to OEMs and contractors. In addition, contractors and developers undertaking large projects also tend to purchase coatings directly from paint and coating manufacturers.
Indonesian Paint and Coating Market Size
Decorative paints and coatings
The market size of decorative paints and coatings is expected to reach 30.1 trillion Indonesian rupiah in 2021, a growth of about 11.2% compared to 2020. During the period from 2021 to 2025, due to the expected continued economic recovery in Indonesia over the next few years, the compound annual growth rate of the Indonesian decorative paints and coatings market size will be close to 9.8%. It is estimated that the real GDP growth rate in Indonesia from 2021 to 2025 will be about 5-6%. With the amplification of the GDP multiplier effect and the gradual shortening of the painting cycle, it is expected that by 2025, the market size of the Indonesian decorative paints and coatings market will reach 43.6 trillion Indonesian rupiah.
It is estimated that between 2021 and 2025, the market size for non-decoration paints and coatings will grow at a compound annual rate of 9.4%, reaching IDR 2.6 trillion by 2025. The prospects for the non-decoration paint and coatings market are driven by increasing demand for automotive refurbishment use and the overall growth of the automotive market.
Indonesia's paint and coating market size by product application, in billions of Indonesian Rupiah, 2015-2025F
Source: Frost & Sullivan report
Driving factor
Demand for new housing and redecoration:In the total sales of decorative paints and coatings, the demand for repainting accounts for nearly 70-75%, with the remainder being for repainting of new residential and commercial buildings. The high demand for new housing, as well as the cultural tradition of repainting houses before public holidays such as Eid al-Fitr and Christmas, ensure a stable demand for paint and coating products.
Government incentive measures:Since 2015, government incentives have driven the growth of Indonesia's construction industry. The Million Houses (OMH) program is one of the government's breakthroughs in the housing sector, aimed at providing Indonesians with decent and affordable housing. The implementation of OMH projects indicates good prospects for the decorative and non-decorative paint and coating markets.
Urbanization and an increase in the number of familiesThe increase in urban population has led to an increase in the number of households. This has resulted in both the demand for coatings for new construction or renovation projects, as well as the demand for coatings due to families moving from rural areas to urban areas. All these will continue to have a positive impact on the paint and coating industry.
Residents' consumption expenditure and disposable income increaseIndonesian residents' consumption capacity and level have maintained a stable growth rate in recent years, mainly reflected in the increase in income (including disposable income) and overall household expenditures. The increase in people's disposable income and purchasing power may drive long-term investment in the real estate sector as well as demand for repainting.
Retail spending increased:Indonesia's retail industry remains one of the most promising markets in Asia due to its large population, increasing middle-class numbers, rising household purchasing power, and increasingly modern consumption habits. The bright prospects for retail spending will drive the sales of decorative and non-decorative paints in the near future.
Growth of the Indonesian construction industry:Construction and the construction industry are among the important sectors supporting Indonesia's economic growth. The growth of the construction industry will directly drive demand in the markets for decorative and non-decorative coatings.
Increased government spending on infrastructure:The government's efforts to improve and develop public infrastructure are one of the main market demands for the paint and coating industry. Higher expenditures on infrastructure are expected to generate demand for decorative and non-decorative paints and coatings.
Tourism expansion:Due to the expansion of Indonesia's tourism industry, the demand for furniture in the hotel sector is expected to increase day by day, which in turn will drive demand for paints and coatings, especially non-decorative wood coatings, as many hotels in Indonesia use wooden furniture and natural wood and log products in their architectural structures.
The impact of the COVID-19 pandemic on the paint and coating industry in Indonesia
The COVID-19 pandemic has slowed down the growth of the paint and coatings market:Action restrictions and economic blockade led to a reduction in construction activities in Indonesia in 2020, and many infrastructure, commercial buildings, and residential construction projects were extended until 2021. Due to the need to reallocate budgets for the fight against the COVID-19 pandemic, the government postponed the development of some infrastructure projects. This led to a decline in project channel sales for paint and coating manufacturers in 2020.
The COVID-19 pandemic has changed people's consumption and lifestyle patterns:The pandemic has led people to stay at home more often, paying greater attention to their living quality and health. This has resulted in a higher demand for coating products, such as those with design elements, as well as products with health and wellness attributes (mainly used on interior walls), such as antibacterial and antiviral coatings, children's theme coatings, highly washable coatings, odorless coatings, etc.
The demand for paint and coating products among low-income consumer groups has decreased:Compared to the middle and high-income groups, the demand for paint and coating products among low-income consumers has decreased. This is because most of them rely on daily wages and their jobs are largely affected by mobility restrictions and economic lockdowns. When their disposable income fluctuates, their willingness to purchase paint and coating products decreases.
Frost & Sullivan has rich research experience in the chemical and materials industries, assisting well-known enterprises in successfully accessing the capital market. Successful listings include: Global New Materials (6616.HK), Dafeng Equipment (2153.HK), EIC International (8659.HK), GHW (9933.HK), Sanhe Fine Chemicals (0301.HK), Xingyu Holdings (2346.HK), Xinghe Holdings (1891.HK), Xuyang Group (1907.HK), Long Resources (1712.HK), Shandong Gold (1787.HK), Henan Jinma (6885.HK), Xingye New Materials (8073.HK), Dongguang Chemicals (1702.HK), Zhongqi Group (1932.HK), Xinbang Holdings (1571.HK), Meigu Technology (8349.HK), Huajin International (2738.HK), Flot Glass (6865.HK), Dynos (01452.HK), Caike Chemicals (1986.HK), Chang'an Renheng (8139.HK), Sansida (01337.TWSE), Born NYSE, CPC NYSE, Gu NYSE, Tianhe Chemicals (01619.HK), Yihua Holdings (02121.HK), Sijia Group (01863.HK).
Recommended Reading
04. Frost & Sullivan assists GHW in successfully listing on the Hong Kong Stock Exchange (9933.HK)
19. Frost & Sullivan assists Dinos in successfully listing on the Hong Kong Stock Exchange (1452.HK)
Frost & Sullivan helps Chang'an Renheng successfully go public in Hong Kong (8139.HK)
