SIDO Aug2023

SIDO

Contact our analyst Eka

32% upside, BUY
2nd August 2023
Price Rp 640
Target price Rp 855

Pharmacy sales rebound

SIDO's sales increased by 2% YoY but declined by -17.7% QoQ to IDR 746 billion due to softer demand after Ramadan. However, for 1H2023, SIDO maintained a 2.6% YoY growth, with total sales reaching IDR 1.65 trillion.
The pharmaceutical segment showed significant improvement, with a 37% QoQ growth to IDR 31.8 billion in 2Q2023. Most of the syrup medicine products were distributed again as of May 2023, leading to a quarterly improvement in the pharmaceutical gross profit margin (GPM) to 36.4%.
Herbal & supplement sales decreased by -2.1% YoY or -18.6% QoQ to IDR 450.2 billion. Tolak Angin experienced soft sales post Ramadhan, and a lower market share than last year but still maintained its market leadership position. Stable raw material prices in 2Q2023 resulted in a higher herbal and supplement GPM at 66.4%, compared to 64.2% last year.
F&B sales increased by 12% YoY but declined by -20% QoQ to IDR 264.4 billion in 2Q2023 due to significant growth in the Ready to Drink (RDT) product, which showed over 350% YoY growth. F&B margins continued to improve, reaching 31.7% in 2Q2023 helped by a decline in several raw material prices.

Trade what you want (exciting shares like SIDO) when you want & wherever you are. Simply sign up for our Binaartha Online Trading
⬇️ here.⬇️

2Q2023 Result: Margin drop

SIDO's 2Q2023 bottom line profit dropped by -1.8% YoY or -50.8% QoQ to IDR 147.8 billion, with a lower net profit margin (NPM) at 19.8% due to an unrealized loss on foreign exchange of IDR 37 billion from depreciation of the Nigerian currency. This is lower than the 33% NPM recorded in 1Q2023.
As of 1H2023, SIDO's net profit was IDR 448.1 billion, a slight increase of 0.6% YoY, with a slightly lower NPM of 27.1%.
Operating income was IDR 193.7 billion, a slight increase of 1% YoY, but it declined by -47.7% QoQ with a lower margin at 25.6%.

2023F Guidance and Valuation:

The management has reversed their 2023F guidance from +10% growth to -10% in the worst-case scenario due to softened demand and changes in customer behavior in the domestic market for 2H2023. Additionally, the instability of the exchange rate in Nigeria has negatively impacted SIDO's export sales in 2H2023.
However, despite the challenges, our recommendation for SIDO remains a BUY. The expectation is that purchasing power will normalize in the next year. The target price (TP) is IDR 855, representing a 32% upside, with a 21x PE valuation within one year.

Previously

SIDO May2023