INDF Jul2021

INDF

Contact our analyst Eka

Buy, 33% upside
23rd July 2021
Price Rp 6,525
Target price Rp 8,680

Strong Performance from ICBP and Agribusiness

INDF performance was strong in 1Q2021 as sales increased +27% YoY to IDR 24.5 trillion, boosted by ICBP and Agribusiness.
Consumer Branded Products (ICBP) recorded growth of +27% YoY and is still the largest contributor at 59%, of total sales with IDR 24.5 trillion. EBIT margin was higher at 23.8% in 1Q2021 from 17.7% in 1Q2020.
Bogasari contributed 25% of total sales, or IDR 6.02 trillion which is growth of +10.5% YoY, and Bogasari’s EBIT margin slightly decreased to 7.6% from 10%.
Agribusiness contributed 19% to total sales with strong growth of 40% to IDR 4.69 billion. Agribusiness EBIT margin also doubled from 5% to 10%.
Distribution also recorded growth of +19% to IDR 1.33 trillion.
The acquisition of Pinehill Company Limited by ICBP has expanded INDF’s market, which can be seen from the increases of Middle East and Africa sales +311% and Other Asia markets, +84%.
We expect a better sales performance in 2021, with double-digit growth of +17% YoY to IDR 95.2 trillion.

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1Q2021: Double-Digit Growth

INDF 1Q2021 net profit grew +23% to IDR 1.7 trillion with a stable net profit margin of 7%.
INDF’s gross profit growth was higher at +36% YoY to IDR 8.5 trillion. This resulted in a higher GPM of 35%.
Operating income also increased by +43% YoY to IDR 4.9 trillion, with a higher OPM from 17.8% to 20%.
INDF’s financial expenses increased +50.8% YoY, but profit before taxes still increased +42% YoY to IDR 3.48 trillion.
We believe the strong 1Q2021 performance will continue throughout 2021, and we expect double-digit growth in INDF’s profit of +22% YoY to IDR 7.86 trillion

Valuation: BUY with TP 8,680

As we expect better INDF’s performance in 2021, We are targeting INDF to reach IDR 8,680 or 33% upside, which is an 9x PE valuation within one year. BUY.

Previously