ICBP Aug2024

ICBP

Contact our analyst Eka

Buy, 34% upside
27th August 2024
Price Rp 11,400
Target price Rp 14,950

Sales across all business segments increased

ICBP's sales rose by +11.1% YoY but declined by -13.5% QoQ, reaching IDR 17 trillion, driven by growth across all business segments in Q2 2024. Sales to the Middle East and Africa saw double-digit growth of +13.5% YoY, reaching IDR 4.03 trillion. Domestic sales remained the largest contributor to total sales at 70%, climbing to IDR 11.88 trillion, marking a 13.5% increase. Sales to Other Asia surged by 34% YoY to IDR 645 billion in Q2 2024.
Every business segment of ICBP recorded positive growth, with the food seasoning segment achieving the highest annual growth of +23.8% YoY to IDR 969 billion due to higher sales volume. However, the EBIT margin declined YoY to 12.9% due to higher raw material costs but improved QoQ from 11.7% in Q1 2024.
Noodle sales achieved double-digit growth of +11.5% YoY, reaching IDR 12.6 trillion due to a +12% YoY increase in sales volume, in line with the strong penetration of new noodle variants launched in 1H2024, while the ASP remained flat. The EBIT margin increased to 26.5% in Q2 2024.
The dairy segment sustained positive growth, increasing by 4.5% YoY to IDR 2.27 trillion in Q2 2024, driven by a 7% increase in sales volume, with the most significant contributors being sweetened condensed milk and liquid milk. The EBIT margin for this segment improved annually to 9.1%.
The beverage segment recorded a +7.4% YoY increase in sales to IDR 417 billion, spurred by a more than 10% increase in volume. The EBIT margin for the beverage segment rose to 14% from 12.2% in the previous year.
Sales of nutrition and special foods rose by 6.7% YoY to IDR 313 billion, maintaining a stable EBIT margin of 6.4%. Snack food sales increased by 16% YoY to IDR 1.16 trillion, with the EBIT margin improving to 11% from 7.6% the previous year.
ICBP expects mid-single-digit top-line growth for 2024F, driven by higher demand and volume expansion.

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Q2 2024 Results: Maintained double-digit Core profit growth

ICBP reported a net profit of IDR 1.18 trillion in Q2 2024, a decrease of -33% YoY, primarily due to net losses on foreign exchange differences from financing activities totaling IDR 1.55 trillion in Q2 2024. Nevertheless, ICBP's core profit in Q2 2024 reached IDR 2.38 trillion, maintaining double-digit growth, reflecting a 31.5% YoY increase. For 1H2024, core profit reached IDR 5.63 trillion, showing a +20.3% growth, with net losses on forex amounting to IDR 2.75 trillion.
ICBP's gross profit increased by 14.6% YoY to IDR 6.38 trillion, with an improved gross profit margin (GPM) of 37.5% due to higher sales volume.
Operating profit also increased by 28% YoY to IDR 3.97 trillion, with a higher operating profit margin of 23.3%.
Anticipating higher demand in 2024F and a fluctuating Rupiah, we project ICBP's bottom line to reach IDR 8.17 trillion, reflecting a 13.7% growth.

Valuation: Buy with upgrade TP to 14,950

Based on ICBP's continued positive growth performance in Q2 2024 and the anticipated benefits from new government policies such as the free meal program, we maintain a BUY recommendation for ICBP. Our target price for ICBP is set at IDR 14,950, reflecting a potential upside of 34% and a 19X PE valuation within a year.

Previously