INDF
Contact our analyst Eka
Buy, 35.4% upside
2nd September 2021
Price Rp 6,350
Target price Rp 8,600
2nd September 2021
Price Rp 6,350
Target price Rp 8,600
Growth on the track
- INDF’s sales increased +13.2% YoY to IDR 22.7rillion in 2Q2021 but were -7.4% QoQ lower compared to 1Q2021. ICBP and Agribusiness were still the fastest growing in 2Q2021. For 1H2021, INDF booked sales of IDR 47.3 trillion, up 20% YoY. The result is in line with our estimate (98%).
- Consumer Branded Products (ICBP) recorded growth of +16.8% YoY and is still the largest contributor to total sales at 53.8%. EBIT margin was also slightly higher at 19.8%.
- Agribusiness EBIT margin jumped from 1.6% last year to 13.8% in 2Q2021, with double-digit growth of 15% to IDR 4.16 billion.
- Bogasari booked sales of IDR 5.98 trillion up +6.5% YoY with an improved EBIT margin of 5.6% from 3.8%.
- Distribution recorded growth of +2.4% to IDR 1.21trillion.
- We expect a better sales performance in 2021, with double-digit growth of +17.7% YoY to IDR 96.2 trillion.
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Margin up YoY, but lower QoQ
Valuation: Maintain BUY with TP 8,600
- INDF 2Q2021 net profit grew +18.4% to IDR 1.7 trillion but was slightly lower -1.4% QoQ with a higher net profit margin of 7.5% from 7% in 1Q2021.
- For 1H2021, INDF net profit reached IDR 3.4 trillion, up 21% YoY with a stable NPM of 7.2%.
- Operating income growth was faster at +63% YoY to IDR 3.58 trillion in 2Q2021 from lower financial expenses compared to 1Q2021, and with a higher OPM from 10.9% to 15.75%. The OPM in 1H2021 was also higher at 18%.
- INDF’s gross profit growth was faster at +19% YoY to IDR 7.37 trillion. This resulted in a higher GPM of 32.4%.
- For 1H2021, INDF’s financial expenses increased +171% YoY, but profit before taxes still increased +34.8% YoY to IDR 6.68 trillion.
- We believe INDF will maintain a good performance throughout 2021, and we expect double-digit growth in INDF’s profit of +12% YoY to IDR 7.2 trillion.
Valuation: Maintain BUY with TP 8,600
- As we expect a better INDF performance in 2021, We are targeting INDF to reach IDR 8,600 or 35.4% upside, which is an 9x PE valuation within one year. Maintain BUY.
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