ICBP Dec2022

ICBP

Contact our analyst Eka

Buy, 26% upside
12th December 2022
Price Rp 10,150
Target price Rp 12,750

Strong sales growth

In 3Q2022, ICBP maintained double-digit sales growth of +13% YoY or +6% QoQ (IDR 16.3 trillion) with an improved margin. For 9M2022, ICBP booked revenue of IDR 48.9 trillion with sales to the Middle East and Africa growing by +16.5% to IDR 10.86 trillion, while domestic sales grew by +12,5% YoY to IDR 35.5 trillion.
Sales of noodles grew by +16% YoY, or +8% QoQ, to IDR 12.2 trillion with a higher EBIT margin of 25.6% due to higher price and volume.
Beverage sales grew by +25% YoY and +7% QoQ to IDR 414 billion with a higher EBIT margin of 5.7%.
Sales of Snack Foods saw an increase of +9% YoY or +6% QoQ to IDR 981 billion. The snack food EBIT margin increased to 8.4% from 5.6% last year.
Food Seasoning sales grew by +32% YoY growth or +4% QoQ to IDR 839 billion while the margin declined to 9.1%.
Dairy sales declined by -10% YoY or -18% QoQ to IDR 2.01 with a flat QoQ EBIT margin of 3.2% due to higher skim milk powder prices.
Nutrition & special foods sales also declined by -1% YoY to IDR 266 billion but with a higher EBIT margins of 9%.
Higher prices and lower raw material costs in 3Q2022 has helped to improve margins. We maintain our double-digit sales growth target for this year at+15% to IDR 65.2 trillion.

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3Q2022 Result: Margin Improvement

Amid lower commodity prices (wheat, CPO, and skimmed milk powder) ICBP booked an improved margin in 3Q2022.
After a loss in 2Q2022, ICBP booked a profit of IDR 1.38 trillion in 3Q2022. The net profit margin improved to 8.5% in 3Q2022. For 9M2022, the profit still decreased compared to last year by -58.3% to IDR 3.3 trillion, due to the loss in 2Q2022, with a lower NPM at 6.8%.
The cost of goods sold decreased slightly by -1.4% QoQ to IDR 10.7 trillion. As a result, ICBP's gross profit increased by +23.4% QoQ or +9.5 YoY to IDR 5.58 trillion in 3Q2022. This resulted in a higher GPM of 34.2%.
The USD to IDR fluctuations still weigh on the bottom line profit and ICBP booked higher foreign exchange losses in 3Q2022 of IDR 1.08 trillion from a gain in 3Q2021. As a result, profit before tax was lower by -19% YoY but higher by +277% QoQ to IDR 2.15 trillion.
We expect the company’s net profit to reach IDR 5.54 trillion for 2022F, which is a decrease of -13.2% YoY.

Valuation: Upgrade TP to 12,750

As the previous ICBP target has been reached, we are upgrading our ICBP’s target price to IDR 12,750 which is 26% upside, and a 22x PE valuation within one year. Maintain BUY.

Previously

ICBP Sep2022