KLBF Nov2020

KLBF

Contact our analyst Eka

28% Upside, BUY
12th November, 2020
Price Rp 1470
Target price Rp1890

More covid-19 related products and vaccine update

KLBF’s covid-19 vaccine collab with Genexine, is now targeting commercialization in the middle or 3Q of 2021, after facing delays in stage I research.
As of October 2020, the vaccine is still in stage 2 clinical trials which are being carried out in South Korea, as will stage 3. The clinical trials in Indonesia are expected to start in 4Q2020.
KLBF has also launched Remdesivir treatment for Covid-19 in Indonesia.

3Q2020 results bellow expectation

As of 9M2020, KLBF recorded positive net sales growth of 1.6%% YoY to IDR 17.1 trillion. In terms of QoQ growth, KLBF net sales decreased by -5.3% to IDR 5.49 trillion in 3Q2020.
Consumer health decreased -23.7% QoQ to IDR 820.59 billion in 3Q2020 due to higher consumer health product demand earlier in the covid-19 outbreak in 2Q2020. Distribution and logistics also decreased by -10.7% QoQ to IDR 1.74 trillion in 3Q2020.
Nutrition and Pharmaceutical sales still maintained a positive QoQ growth in 3Q2020. Nutrition recorded sales of IDR 1.72 trillion or growth of +6.8% QoQ and Pharmaceutical sales recoded +3.3% QoQ growth to IDR 1.2 trillion in 3Q2020.
As KLBF’s management has revised their sales target for 2020F, we revise our 2020F target to 4.7% growth, IDR 23.7 trillion.

Margin Improved

Despite the 3Q2020 sales decrease, KLBF still maintained their margin due to price increases on selected products.
Profit before tax grew +4.4% YoY to IDR 2.68 trillion, mostly due to lower operating expenses and forex gains. The margin slightly improved from 15.3% to 15.7% in 9M2020.
The net income margin also increased slightly to 11.9% and net income grew by a single digit +5.8% YoY to IDR 2.02 trillion.
We are expecting KLBF can at least maintain their margin in 2020F and the bottom line will reach IDR 2.69 trillion or growth of +8% YoY.

Valuation: BUY TP 1,890 with 28% upside

We are targeting KLBF to trade at 30x PE within a year. Target Price is IDR 1,890 which represents 28% upside. BUY

Previously

KLBF Aug2020