KLBF Aug2020

KLBF

Contact our analyst Eka

21% Upside, BUY
1st August, 2020
Price Rp 1560
Target price Rp1880

Covid-19 vaccine

As part of their contribution to the fight against the Covid-10 pandemic in Indonesia, KLBF has signed an MoU with Genexine, Inc to develop a Covid-19 vaccine. Kalbe and Genexine have agreed to conduct GX-19 clinical trials in Indonesia. This will be one of the new DNA vaccines against corona viruses and KLBF is working together with a consortium of Genexine, Binex, the International Vaccine Institute (IVI), GenNBio, the Korea Advanced Institute of Science & Technology (KAIST) , and Pohang University of Science & Technology (POSTECH). The Covid-19 vaccine clinical trials started in June 2020 and KLBF estimates this product will be commercially available in August 2021.
To date, there are 4 international collaborations include KLBFs which will potentially produce a Covid-19 vaccine.
This news has boosted sentiment towards KLBF’s shares which have surged +21% in three months.•

Double-digit profit Growth

In 1H2020, KLBF recorded single digit net sales growth of 3.8%% YoY to IDR 11.6 trillion, with the largest contribution coming from distribution and logistics with 32% of sales and growth of +10% YoY to IDR 3.75 trillion.
Nutrition was 28% of total sales with IDR 3.2 trillion, prescription IDR 2.56 trillion and the consumer health segment recorded sales of IDR 2.1 trillion, up by +6.5% YoY.
Gross profit increased slightly +1.47% YoY to IDR 5.25 trillion, with a slightly lower GPM of 45.3% from 46.3% in 1H2019.
Profit before tax grew +7.2% YoY to IDR 1.81 trillion, mostly due to lower operating expenses and forex gains.
This led to a higher net income margin of 12% and net income growth of a double digit +10.3% YoY to IDR 1.38 trillion.
We maintain our 2020F sales forecast of IDR 24.4 trillion or growth of +8% YoY and a bottom line forecast of IDR 2.7 trillion.

Valuation: BUY TP 1,880 with 21% upside

We are targeting KLBF to trade at 30x PE within a year. Target Price is IDR 1,880 which represents 21% upside. BUY

Previously

KLBF Apr2020