ICBP Mar2021

ICBP

Contact our analyst Eka

Buy, 37% upside
25th March 2021
Price Rp 9,250
Target price Rp 12,700

Double digit sales growth

ICBP managed double digit sales growth for both 4Q2020 and 2020. In 4Q2020, ICBP sales grew +34.1% YoY and +17.5% QoQ to IDR 12.74 trillion, higher growth compared to other quarters in 2020. For 2020FY, net sales grew +10.3% YoY to IDR 46.64 trillion.
In 4Q2020, Noodles are still the largest contributor at 69%, with sales of IDR 9.1 trillion, followed by Diary at 15.8%, IDR 2.1 trillion, Snack Foods 6%, IDR 794 billion, Food Seasonings 4.5%, Nutrition & Special Foods 2.2% and Beverages 2.5%.
Noodles EBIT margin is at its highest level, 26.4%, The snack foods EBIT margin also recorded a record high of 14.1%. Beverages EBIT margin continued to improve to 5.2%.
The acquisition of Pinehill Company Limited has made a positive contribution and this meant 4Q2020 results were higher than we expected, giving us higher optimism now for 2021, as the economy improves and as the vaccine program is on the track.

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4Q2020: Highest Margin

With double digit sales growth, ICBP’s gross profit growth was also higher at +55.6% YoY to IDR 4.89 trillion in 4Q2020. This resulted in the highest GPM of 38.4% in 4Q2020. For 2020FY GPM increased to 37%.
Operating income also increased by +74% YoY to IDR 2.7 trillion with the OPM also at a record high of 21.8%. For 2020FY OPM increased to 20.5%.
The bottom line enjoyed triple digit growth of +127.4% YoY to IDR 2.64 billion in 4Q2020, giving double digit 2020FY bottom line growth of 30.7% YoY to IDR 6.59 trillion, this includes the impact of gains on foreign exchange from financing activities. The NPM in 4Q2020 also reached a high of 20.6%.
We expect ICBP strong performance will continue in 2021 from a full year contribution of the acquisition. We expect double digit growth for 2021F sales and bottom line.

Valuation: BUY with TP 12,700

We are targeting ICBP to reach IDR 12,700 or 37% upside, which is a 20x PE valuation within one year. Maintain BUY.

Previously

ICBP Dec2020