ICBP Apr2022

ICBP

Contact our analyst Eka

Buy, 35% upside
14th April 2022
Price Rp 7,325
Target price Rp 9,885

Sales lower quarterly

ICBP booked double digit sales growth of +11.3% YoY but sales were lower -1.7% QoQ to IDR 14.2 trillion in 4Q2021, while higher raw material prices (wheat, skim milk powder, CPO) in 4Q2021 weighed on margins.
Noodles sales grew +13% YoY but were lower by -2.7% QoQ to IDR 10.2 trillion and the EBIT margin declined from 26.4% last year to 25% due to the rising raw material costs.
Dairy and beverage sales both grew YoY and QoQ to IDR 2.35 trillion and IDR 339 billion respectively, but both also had lower EBIT margins which decreased to 2.7% and 3.8% due to higher skim milk powder prices.
Snack Food sales were IDR 846 billion which is an increase of +6.5% YoY but lower -6.2% QoQ. The snack food EBIT margin also decreased to 4.9% from 14.1% last year.
Food Seasoning sales decreased -1% YoY or -8.6% QoQ to IDR 581 billion with a higher EBIT margin of 16.3% from 10.6% last year.
Nutrition & Special Food sales decreased -2% YoY but increased +5.3% QoQ to IDR 284 billion with a higher EBIT margin of 11.5%.
For 2021FY, ICBP maintained double digit growth of +22% YoY to IDR 56.8 trillion, which is +99.2% in line with our forecast.
We maintain our double-digit sales growth target for this year of +16% to IDR 65.6 trillion.

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Lower Margins

Because of higher raw material costs, ICBP margins were lower in 4Q2021.
ICBP booked a profit of IDR 1.4 2trillion, down by -46% YoY or -18.8% QoQ with a lower net profit margin of 10% from 21% in 4Q2020.
For 2021FY, ICBP net profit slightly decreased -3% YoY to IDR 6.38 trillion with a lower NPM of 11.2% from 14.1%.
Cost of goods sold increased +20% YoY or +1.2% QoQ from the increase in raw material prices. As a result ICBP gross profit decreased -3% YoY or -7% QoQ to IDR 4.75 trillion in 4Q2021. This resulted in a lower GPM from 38.4% in 4Q2020 to 33.5% in 4Q2021.
For 2021, the gross profit margin also decreased to 35.7% from 36.9%.
As rising prices for most raw materials will continue in 2022F, we expect the margin will contract further and target net profit to reach IDR 7.5 trillion for 2022F.

Valuation: Maintain BUY with TP 9,885

We are targeting ICBP to reach IDR 9,885 or 35% upside, which is a 14x PE valuation within one year. Maintain BUY.

Previously

ICBP Dec2021