ICBP Nov2024

ICBP

Contact our analyst Eka

Buy, 23% upside
20th November 2024
Price Rp 11,900
Target price Rp 14,700

Sales across all business segments increased

ICBP’s sales rose by +10% YoY or +9% QoQ, reaching IDR 18.5 trillion, driven by sales volume growth across all business segments in Q3 2024. Sales to the Middle East and Africa saw double-digit growth of +18.1% YoY, reaching IDR 4.77 trillion. Domestic sales remained the largest contributor to total sales at 66%, climbing to IDR 12.26 trillion, marking a +4.9% increase. Sales to Other Asia surged by +41% YoY to IDR 570.5 billion in Q3 2024, and other regions increased +32% YoY to IDR 923 billion.
Every business segment of ICBP recorded positive growth, with Noodle sales maintaining double-digit growth of +10% YoY, reaching IDR 14 trillion due to a +5% YoY increase in sales volume in Q3 2024 or +7% YoY in 9M2024, in line with the strong penetration of new noodle variants launched in 2024, while the ASP remained flat. The EBIT margin decreased to 23.2% in Q3 2024 due to higher Noodles COGS by +12%.
The dairy segment’s sales increased by +13% YoY but fell -3% QoQ to IDR 2.2 trillion in Q3 2024, driven by flat sales volume in Q3 2024 but an +8% increase in sales volume in 9M2024, with the most significant contributors being sweetened condensed milk and liquid milk. The EBIT margin for this segment decreased to 5.7% in Q3 2024 from 6.3% in Q3 2023.
The food seasoning segment sales increased +27% YoY to IDR 1.03 trillion due to higher sales volume (+6% in Q3 2024 and +16% in 9M2024). However, the EBIT margin declined QoQ to 11.4% due to higher raw material costs.
The beverage segment recorded a +1% YoY or +2% QoQ increase in sales to IDR 427 billion, spurred by a more than +3% increase in volume in Q3 2024 and total +7% growth in 9M2024. The EBIT margin for the beverage segment rose to 15.4% from 14% in the previous year.
Sales of nutrition and special foods rose by +35% YoY to IDR 377 billion, with a higher EBIT margin of 9.8% due to higher sales volume (+16% in Q3 2024 and low single-digit volume growth in 9M2024). Snack food sales increased by +5% YoY to IDR 1.2 trillion, with the EBIT margin improving QoQ to 11.4%.
ICBP maintained mid-single-digit top-line growth for 2024F, driven by higher demand and volume expansion.

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Q3 2024 Results: Higher forex gain while margin decreased

ICBP reported a net profit of IDR 4.6 trillion in Q3 2024, an increase of +246% YoY, primarily due to a net gain on foreign exchange differences from financing activities totaling IDR 2.2 trillion in Q3 2024 compared to a forex loss of IDR 1.5 trillion in Q2 2024. Nevertheless, ICBP’s core profit in Q3 2024 reached IDR 2.4 trillion, maintaining positive growth, reflecting a +5.1% YoY increase. For 9M2024, core profit reached IDR 8.03 trillion, showing a +15.3% growth, with net losses on forex amounting to IDR 536 billion.
ICBP’s gross profit increased by +9.6% YoY to IDR 6.6 trillion, with a lower gross profit margin (GPM) of 36% due to higher cost of sales (+10.3% to IDR 11.86 trillion in Q3 2024). The higher cost of sales was driven by rising raw material costs (+20.4% YoY for wheat, chili, and cooking oil) and higher freight and handling costs (+26.6%).
Operating profit also decreased by -18.3% YoY to IDR 3.1 trillion, with a lower operating profit margin of 16.7%.
Anticipating higher demand in 2024F and a fluctuating Rupiah, we revised ICBP’s bottom line to reach IDR 9.19 trillion, reflecting a +31.5% growth.

Valuation: Buy with TP to 14,700

Based on ICBP’s strong performance in Q3 2024 and the anticipated benefits from new government policies such as the free meal program, we maintain a BUY recommendation for ICBP. Our target price for ICBP is set at IDR 14,700, reflecting a potential upside of +23% and a 17x PE valuation within a year.

Previously