SIDO
Contact our analyst Eka
17% upside, HOLD
4th August 2022
Price Rp 765
Target price Rp 895
4th August 2022
Price Rp 765
Target price Rp 895
A shifting trend
- Because rising commodity prices have triggered an increase in inflation in 2Q2022, the previous prevailing trend has begun to change. Consumer focus has shifted to staples needs, and demand for vitamin products has declined.
- In 2Q2022, SIDO sales decreased -15.1% YoY or -17% QoQ to IDR 731.6billion from an across the board slowdown.
- Pharmacy had the lowest decrease of -3% YoY or -16.3% QoQ to IDR 35.7 billion in 2Q2022.
- F&B sales also fell -12.2% YoY or -23.5 to IDR 236.1 billion in 2Q2022 driven by lower Kuku Bima Energy and Vit. C. sales. Because of higher raw material costs, SIDO increased ASPs in 2Q2022.
- Herbal & supplement sales also declined by -17.3% YoY or -13.1% QoQ to IDR 459.7 billion due to a decline in demand during Ramadan.
- The contribution of export sales increased from 4% in 2021 to 6% in 1H2022, from increased international business of over 80% YoY with Malaysia and Nigeria as the top buyers. SIDO also expanded sales to Senegal and Togo in 1H2022.
- After the demand slowdown in 2Q2022 we expect the downtrend to continue in 3Q2022, and we revise SIDO top line target sales in 2022F to IDR 4.16 trillion which is single digit growth +4% YoY.
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2Q2022 Result: Margin decline
Valuation: HOLD with TP 895
- SIDO margins declined in 2Q2022 with lower sales. SIDO net profit was IDR 150 billion, down by -35% YoY or 49% QoQ with a lower NPM of 20.6% compared to 1Q2022's 33.5%. For 1H2022, SIDO net profit decreased by -11% YoY to IDR 445.6 billion with a lower NPM of 27.6%.
- Operating profit margins also declined from 41.7% in 1Q2022 to 26.2% in 2Q2022. Gross profit dropped -22.7% YoY to IDR 372.6 billion in 2Q2022 with a lower NPM of 50.9% from 54.7% in 1Q2022.
- After the decline in the 2Q2022 result, we revise down our profit forecast for 2022F. We are now expecting SIDO profit to reach IDR 1.65 trillion.
Valuation: HOLD with TP 895
- After the 2Q2022 result, we downgrade our recommendation to HOLD. We are targeting SIDO to reach IDR 895 or 17% upside, which is a 20x PE valuation within one year. HOLD.
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