SIDO
Contact our analyst Eka
23% Upside
24 February 2020
Price Rp 1275
Target price Rp 1570
24 February 2020
Price Rp 1275
Target price Rp 1570
2019FY: Double digit growth
Increasing Exports Revenue
Valuation: BUY with TP 1,570
- In 2019FY SIDO recorded double digit growth. Net sales was higher by 11% yoy to IDR 3.07 trillion, led by strong performances from all business segments and both domestic sales and exports.
- Gross profit increased by +18% to IDR 1.68 trillion led by margin improvements in the Food & Beverage (F&B) and Herbal segments.
- Operating profit increased by +24.3% yoy to IDR 1.02 trillion and net profit grew +21.7% yoy to IDR 808 billion in 2019FY.
- In 2020, we expect SIDO’s bottom line will grow at a double digit rate to reach IDR 933 billion, with a stable margin.
- Each business segment of SIDO showed an improvement in profit margin as the cost of raw materials declined while ASPs of several products increased.
- Herbal & supplements segment is still the biggest contributor to 2019FY SIDO revenue, at 67% of the revenue, which is slightly higher than the contribution in the previous year (i.e. 66% of revenue). F&B and Pharmaceuticals came in next with their contributions to 2019FY revenue at 29% and 4%, respectively.
- Herbal & supplements posted +12% yoy revenue growth to IDR 2.06 trillion. Revenues from the F&B and pharmaceuticals segments were IDR 886 billion (+8.1% yoy) and IDR 117 billion (+17% yoy), respectively.
- Herbal & supplement product gross profit margins in 2019FY improved to 65% from 63% in 2018 due to operational efficiencies. F&B margin increased from 29% in 2018 to 35% in 2019, while the pharmaceutical margin was stable at 28%.
- We expect a stable margin in the future.
Increasing Exports Revenue
- In 2020, SIDO is targeting a 6%-7% revenue contribution from exports, focusing on the Philippines, Malaysia, and Nigeria while also entering new markets. In 2019FY, the export contribution was 5% of net sales, an increase from less than 2% in 2018.
- In the Philippines, SIDO market share has reached 23% despite the fact that SIDO has only been in the market for one year. We expect the Company’s market share in the Philippine will keep growing as they increase marketing and because there is only a small price difference with competitors.
- SIDO will also maintain their domestic market share by increasing product supply to eastern Indonesia.
- SIDO is also planning to launch 2-3 new products in 2020.
Valuation: BUY with TP 1,570
- With good 2019FY results and our double digits growth forecast for the bottom line, we are targeting SIDO to reach IDR 1,570 in 2020F or 23% upside, which is a 25x PE valuation within one year. BUY
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