ICBP May2023

ICBP

Contact our analyst Eka

Buy, 22% upside
23rd May 2023
Price Rp 11,000
Target price Rp 13,400

Margin improve

ICBP maintained double-digit sales growth of +11.4% YoY or +20.5% QoQ to IDR 19.14 trillion with an improved margin in 1Q2023. Domestic sales contributed IDR 14.17 trillion with +12% growth, export sales to the Middle East and Africa grew by +4.5% to IDR 3.9 trillion while other Asia recorded +55.4% YoY growth to IDR 431 billion.
Sales of noodles grew by +14.4% YoY or +19.5% QoQ, to IDR 14.01 trillion with a higher EBIT margin of 26.9% due to lower commodity prices and higher selling prices and volumes.
Dairy sales declined by -2.9% YoY but were higher +21.7% QoQ to IDR 2.6 with a lower EBIT margin of 7.2% from 11% in 1Q2022 due to higher selling prices while volumes declined in line with a slowdown in the domestic dairy market. Raw material costs were higher in line with higher sugar prices while skimmed milk prices softened.
Snack Food sales increased +12.1% YoY or +7.6% QoQ to IDR 1.13 trillion. The snack food EBIT margin increased slightly to 7.8%.
Beverage sales grew by +6.8% YoY +4.8% QoQ to IDR 394 billion with a higher EBIT margin of 11.8% from 8.2% in 1Q2022.
Food Seasoning sales grew faster than others, +27.1% YoY or +73.9% QoQ to IDR 1.26 trillion while the margin increased to 13.5% due to double digit sales volume growth and a higher ASP in 1Q2023.
Nutrition & special foods sales were flat at IDR 317 billion but with a higher EBIT margin of 10.1%.
With higher ASPs in all segments and demand expected to grow in 2Q2023, we maintain our double-digit sales growth target for this year at +12% to IDR 72.33 trillion.

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1Q2023 Result: Triple-digit profit growth

The margin improvement continued in 1Q2023 due to lower commodity prices such as CPO, wheat, skimmed milk and higher selling prices.
ICBP's gross profit increased by +18.5% YoY or +20% QoQ to IDR 6.96 trillion in 1Q2023 with a higher GPM of 36.4%.
Net profit increased too with triple-digit growth of +104% YoY or +209% QoQ to IDR 3.95 trillion due to forex gains in 1Q2023 of IDR 1.83 trillion. As a result, profit before tax was higher by +99.4% YoY or +170% QoQ to IDR 5.5 trillion. The NPM also increased significantly to 20.7% from 8% in 4Q2022.
We expect higher margins in 1H2023 from higher volumes and higher selling prices. With higher 1Q2023 results, we upgrade our bottom line forecast for ICBP to IDR 8.34 trillion or +81.8% growth in 2023F.

Valuation: Maintain Buy TP to 13,400

We are upgrading our one year ICBP target price to IDR 13,400 which is 22% upside, and a 19X PE valuation. Maintain BUY.

Previously