ICBP
Contact our analyst Eka
Buy, 28% upside
15th January 2024
Price Rp 11,125
Target price Rp 14,300
15th January 2024
Price Rp 11,125
Target price Rp 14,300
Higher growth in snack food, with a stable performance from noodles
- Higher growth in snack food, with a stable performance from noodles. In 3Q2023, ICBP's sales rose by +3% YoY or +10% QoQ, totaling IDR 16.8 trillion. This surge was primarily driven by increased sales volumes in the noodle, snack food, and food seasoning segments. Domestic sales contributed IDR 11.6 trillion, reflecting a slight decline of -1.4%. Meanwhile, export sales to the Middle East and Africa displayed robust growth, rising by +16% YoY, reaching IDR 4.04 trillion in 3Q2023. For 9M2023, ICBP maintained a strong double-digit sales growth of +4.9% YoY, reaching IDR 51.3 trillion.
- Noodle sales remained steady with +5% YoY growth or +13% QoQ, amounting to IDR 12.2 trillion due to a higher sales volume growth of +8.8% YoY. Despite this, the EBIT margin decreased to 24.8%, down from last year’s 25.6%. Snack Food sales witnessed double-digit growth of +17% YoY or +21% QoQ, reaching IDR 1.15 trillion due to a higher sales volume of +7% YoY. The EBIT margin also increased to 13.4% from 8.4% last year.
- Beverage sales remained constant at IDR 422 billion, achieving a higher EBIT margin of 14% compared to 5.7% in 3Q2022.
- Dairy sales encountered a -3% YoY drop or -10% QoQ, amounting to IDR 1.95 trillion due to a lower sales volume by -7%. However, the EBIT margin increased to 6.3% from 3.2% in 3Q2022. Food Seasoning sales decreased by -3% YoY but increased +4% QoQ, totaling IDR 812 billion, with an increased margin of 11.2%.
- Nutrition & special foods sales increased by +5% YoY to IDR 280 billion, accompanied by a lower EBIT margin of 6.6%.
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3Q2023 Results: Stable margins
Valuation: Maintain Buy rating with TP to 14,300
- ICBP reported a lower profit of -3.3% YoY or -25% QoQ, amounting to IDR 1.33 trillion in 3Q2023, primarily due to higher forex loss of IDR 1.2 trillion. However, ICBP's net profit in 9M2023 reached IDR 7 trillion, reflecting a 113% growth.
- The cost of goods sold increased slightly by +0.2% YoY, attributed to a lower raw material cost by -1.6% YoY. As a result, ICBP's gross profit increased by +8.8% YoY, totaling IDR 6.07 trillion, with an improved YoY gross profit margin (GPM) of 36.1%. For 9M2023, ICBP's GPM improved to 36.3%.
- Softer commodity prices (flour, CPO, sugar) will positively impact ICBP’s margin. Looking ahead, we anticipate higher margins in 2024 due to increased demand and a downtrend in commodity prices.
Valuation: Maintain Buy rating with TP to 14,300
- Our price target for ICBP is set at IDR 14,300, reflecting a potential upside of 28% and an 18X PE valuation within a year. We maintain our recommendation to BUY.
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