ICBP
Contact our analyst Eka
Buy, 43% upside
7th July 2021
Price Rp 8,225
Target price Rp 12,120
7th July 2021
Price Rp 8,225
Target price Rp 12,120
Faster Noodles Growth
- ICBP managed double digit sales growth +26% YoY to IDR 15 trillion in 1Q2021. Sales in the Middle East and Africa countries were up +326% YoY to IDR 3.08 trillion from IDR 724 billion.
- Noodles recorded higher growth of +37% YoY and is still the largest contributor at 70%, of total sales of IDR 10.8 trillion. The double-digit growth was supported by the acquisition of Pinehill. Noodles EBIT margin was also higher at 26.7% in 1Q2021 from 20.5% in 1Q2020.
- Noodle sales contribution was followed by Diary at 15.1%, or IDR 2.36 trillion which is growth of +5.3% YoY, and Diary’s EBIT margin slightly decreased to 16.8% from 17%.
- Snack Foods contributed 5.7% to total sales, or IDR 889 billion which is an increase of +15.5%, Snack food’s EBIT margin also increased from 12.6% to 15.6%.
- Food Seasonings increased +9% YoY to IDR 932 billion with an increased EBIT margin from 7.3% to 10.6%.
- Nutrition & Special Foods sales decreased -4.7% and Beverages -17.9% respectively.
- We believe the good performance in 1Q2021 will continue throughout 2021, and we expect double-digit growth in ICBP’s sales of +21% YoY to IDR 56.3 trillion.
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1Q2021: Lower Bottom line
Valuation: BUY with TP 12,120
- Despite ICBP double-digit sales growth in 1Q0221, profit decreased -12.4% to IDR 1.7 trillion due to lower foreign exchange differences from financing activities of IDR 1 trillion from IDR 42.3 trillion in 1Q2020. This resulted in a lower net profit margin from 16.5% to 11.5%.
- ICBP’s gross profit growth was higher at +40.4% YoY to IDR 5.87 trillion in 1Q2021. This resulted in a record GPM of 38.9% in 1Q2021.
- Operating income also increased by +36.4% YoY to IDR 3.8 trillion, higher by 25.3%.
- With higher finance expenses, profit before taxes decreased -4% YoY to IDR 2.65 trillion.
- We expect the strong performance will continue throughout 2021. Despite a lower bottom line in 1Q2021, ICBP’s long-term outlook remains attractive.
Valuation: BUY with TP 12,120
- We are targeting ICBP to reach IDR 12,120 or 43% upside, which is a 18x PE valuation within one year. Maintain BUY.
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