ICBP Jun2022

ICBP

Contact our analyst Eka

Buy, 33% upside
9th June 2022
Price Rp 8,575
Target price Rp 11,440

Maintained Double-Digit Sales Growth

ICBP maintained double digit sales growth of +13.9% YoY or +21.2% QoQ to IDR 17.18 trillion in 1Q2022, while margins in most of ICBP’s businesses declined from a year ago because of higher raw material prices (wheat, skim milk powder, CPO) in 1Q2022.
Noodles sales grew +12.8% YoY or +19.6% QoQ to IDR 12.2 trillion with a higher ASP and higher sales from the Middle East and Africa, +25% YoY. The EBIT margin declined from 26.7% last year to 23% due to rising raw material costs.
Dairy and beverage sales both grew YoY and QoQ to IDR 2.77 trillion and IDR 369 billion respectively, both had higher QoQ EBIT margins which increased to 11% and 8.2% after a drop in 4Q2021 due to higher skim milk powder prices.
Snack Food sales were IDR 1.01 billion which is an increase of +13.9% YoY or +19.6% QoQ. The snack food EBIT margin decreased to 7.6% from 15.6% last year.
Food Seasoning and Nutrition & special foods had growth of +6.3% and +29.7% YoY to IDR 991 billion and IDR 317 billion respectively. Both also booked higher EBIT margins of 12.3% and 9.1%.
As ICBP has increased prices in the range of 3% - 5% in 1Q2022, and demand is expected to grow in 2022, we maintain our double-digit sales growth target for this year of +17% to IDR 66.3 trillion.

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Quarterly Margins Improve

Despite cost pressed from higher raw material prices, ICBP margins improved in 1Q2022.
ICBP booked a profit of IDR 1.94 trillion, up by +11.6% YoY or +36.6% QoQ with a higher net profit margin of 11.3% from 10% in 4Q2021.
Cost of goods sold increased +22.7% YoY or +19.9% QoQ from the increase in raw material prices. As a result ICBP gross profit was stable at IDR 5.87 trillion in 1Q2022. This resulted in a higher GPM from 33.5% in 4Q2021 to 34.2% in 1Q2022.
Profit before tax also grew +4.3% to IDR 2.76 trillion with lower finance expenses of -36% YoY.
With higher ASPs and an improvement in margins in 1Q2022, we expect net profit to reach IDR 7.3 trillion for 2022F with double digit growth of +14.4% YoY.

Valuation: Upgrade TP 11,440

We are targeting ICBP to reach IDR 11,440 or 32% upside, which is a 17x PE valuation within one year. Maintain BUY.

Previously

ICBP Apr2022