ICBP
Contact our analyst Eka
Buy, 41% upside
30th August 2021
Price Rp 8,300
Target price Rp 11,710
30th August 2021
Price Rp 8,300
Target price Rp 11,710
Maintain double-digit sales growth
- In 2Q2021, ICBP managed double digit sales growth of +18.7% YoY to IDR 13.1 trillion but sales were lower -13.2% compared to the 1Q2021. The 2Q2021 was lower due to the month of fasting and Eid in May. For 1H2021, ICBP still maintain doble-digit sales growth of 22.4% YoY to IDR 28.2 trillion, and the result is in line with our estimate.
- Noodles grew +24% YoY, -14% QoQ and is still the largest contributor at 69% of total sales at IDR 9.35 trillion in 2Q2021. Noodles EBIT margin was also lower at 23.7% compared to 26.7% in 1Q2021.
- The second largest contributor is Diary at 16%, with sales of IDR 2.19 trillion which is growth of +7.9% YoY but -7% QoQ. Diary’s EBIT margin slightly increased to 7.7%.
- Snack Foods contributed 5.5% to total sales, or IDR 754 billion which is an increase of +9.8% YoY or -15.1% QoQ, Snack food’s EBIT margin also increased to 11.2%.
- Food Seasonings decreased -8.1% YoY to IDR 705 billion with a stable EBIT margin of 15.2%.
- Nutrition & Special Foods sales increased +9.5% YoY and +2.5% QoQ to IDR 250 billion.
- Beverages also recorded +34.2% YoY growth to IDR 334 billion, but the EBIT margin turned negative after a positive margin in 1Q2021.
- We still expect double-digit growth this year in ICBP’s sales of +23% YoY to IDR 57.26 trillion.
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Positive profit growth
Valuation: Maintain BUY with TP 11,710
- In 2Q2021, ICBP booked positive profit growth of +6.4% YoY but lower -14.5% QoQ at IDR 1.48 trillion with a stable net profit margin of 11.3%.
- For 1H2021, net profit slightly decreased -4.6% YoY to IDR 3.2 trillion with a NPM of 11.4%. The decrease is due to an increase in selling and distribution expenses of +154% and finance expenses +1640% in 1H2021.
- The cost of goods sold increased +24% YoY from an increases in raw materials. ICBP’s gross profit still grew +9.9% YoY but was lower -22.3% QoQ to IDR 4.56 trillion in 2Q2021. This resulted in a lower GPM from 37.6% in 2Q2020 to 34.8% in 2Q2021.
- For 1H2021, gross profit still grew +25% YoY to IDR 10.4 trillion.
- With higher finance and other expenses we expect ICBP’s net profit in 2021F to increase slightly, +0.5% YoY to IDR 6.62 trillion.
Valuation: Maintain BUY with TP 11,710
- We are targeting ICBP to reach IDR 11,710 or 41% upside, which is a 17x PE valuation within one year. Maintain BUY.
Previously