INDF Apr2023

INDF

Contact our analyst Eka

Buy, 43% upside
13th April 2023
Price Rp 6275
Target price Rp 8965

Maintained double-digit sales growth

In 4Q2022, INDF maintained double-digit sales growth of +13% YoY or +7% QoQ to IDR 30 trillion with strong performances from Bogasari, ICBP and distribution.
Bogasari growth was +16.9% YoY or +3.1% QoQ to IDR 8.5 trillion, while Bogasari's EBIT margin decreased to 6.3% from 3Q2022’s 8.9% due to price adjustments.
ICBP sales grew by +11.6% YoY to IDR 16.3 trillion with ICBP’s EBIT margin increasing to 22.1% from 20.3%, in line with softer raw material prices and a sales price hike.
Distribution revenue increased by +71% YoY or +42% to IDR 1.96 trillion with a lower EBIT margin of 3.1% due to higher fuel prices.
Agribusiness sales declined by -3% YoY but were higher QoQ, +27% to IDR 5.47 trillion, while the Agribusiness EBIT margin was flat at 18.6% in 4Q2022.
The weakening of commodity prices has both positive and negative impacts for INDF; positive for ICBP, less positive for Bogasari and Agribusiness.
We expect INDF's top line sales will reach IDR 119.2 trillion which is +8% growth in 2023F.

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4Q2022: Higher forex losses

INDF’s net profit decreased -24% YoY or -1.8% QoQ to IDR 1.71 trillion due to higher forex losses in 4Q2022. This resulted in a lower NPM of 5.7% from 6.2% in 3Q2022.
INDF booked +5.7% YoY growth of gross profit to IDR 8.89 trillion with a lower GPM of 29.6% due to higher cost of sales, up +16.5%.
Operating income increased +17.7% YoY or +2.8% QoQ to IDR 5.5 trillion in 4Q2022 but with a lower OPM of 18.4%.
INDF’s profit before tax also decreased -17.3% YoY to IDR 3.25 trillion with higher finance expenses, +14% YoY and higher forex losses of IDR 2.5 trillion in 4Q2022 after a gain last year.
Despite the pressure from forex losses and softer commodities prices, we expect INDF’s profit to reach IDR 8.2 trillion in 2023F or +29% growth.

Valuation: Maintain BUY with TP 8,965

We are targeting INDF to reach IDR 8,965 or 42% upside, which is a 10x PE valuation within one year. Maintain BUY.

Previously

INDF Dec2022