INDF Dec2022

INDF

Contact our analyst Eka

Buy, 36% upside
16th December 2022
Price Rp 6975
Target price Rp 9490

Margin improvements

In 3Q2022, INDF maintained double-digit sales growth of +10% YoY +11% QoQ to IDR 28 trillion with the margins showing an improvement.
Bogasari growth was +26% YoY or +11% QoQ to IDR 8.2 trillion due to higher prices and flat sales volume. While COGS increased by +22.6% YoY, Bogasari's EBIT jumped +78.4% with a higher EBIT margin of 8.9%.
ICBP sales grew by +15.3% YoY to IDR 16.7 trillion with ICBP’s EBIT margin increasing to 20.3%, in line with softer raw material prices and a sales price hike.
Distribution revenue increased by +5% YoY but was lower QoQ by -3% to IDR 1.39 trillion with a higher EBIT margin of 7.1%.
Agribusiness sales declined by -17% YoY but were higher QoQ by+11% to IDR 4.3 trillion due to higher prices in 3Q2022. Agribusiness EBIT decreased by -6.8% YoY to IDR 806 billion while the EBIT margin improved from 16.7% last year to 18.7%.
With higher prices, we expect INDF's top line sales will reach IDR 121.4 trillion which is +10% growth in 2023F.

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3Q2022: Triple digit QoQ profit growth

INDF’s net profit jumped +222% QoQ but still lower +12% QoQ to IDR 1.75 trillion due to higher ASP and lower commodity price in 3Q2022. The NPM also increased to 6.2% from 2.1% compared to 2Q2022.
INDF’s profit before tax also increased +141% QoQ to IDR 3.4 trillion with higher finance expenses, +14% YoY and higher forex losses of IDR 1.31 trillion in 3Q2022 after a gain last year.
Operating income increased +43% YoY or +484% QoQ to IDR 5.35 trillion in 3Q2022 with a higher OPM from 14.3% in 3Q2021 to 19.1%.
Despite the pressure from forex losses and higher financial costs continue in 3Q2022, while the higher ASP and an improvement in all sector’s margin shown in 3Q2022, we expect INDF’s profit to reach IDR 8.2 trillion in 2023F.

Valuation: Maintain BUY with TP 9.490

We are targeting INDF to reach IDR 9.490 or 36% upside, which is an 10x PE valuation within one year. Maintain BUY.

Previously

INDF Sep2022