SIDO
Contact our analyst Eka
24% Upside
24th July 2020
Price Rp 1270
Target price Rp 1570
24th July 2020
Price Rp 1270
Target price Rp 1570
Stable Sales despite Covid-19
- In the 1H2020, SIDO sales grew +3.5% YoY to IDR 1.46 trillion. Domestic sales was the driver with a 98% contribution while exports contributed 2%.
- 2Q2020 domestic demand increased for SIDO’s health drink products such as Vit C1000 powder drink and ginger drinks such as milky ginger, coffee ginger, etc.
- Export sales were stable while the Herbal & Supplement sector was dragged by a decline in the Philippine market as well as weak Tolak Angin sales.
- The Herbal & Supplement sector declined -2.1% to IDR 923 billion with a 63% sales contribution, followed by F&B with a 32% contribution and +16.5% growth to IDR 469 billion. Pharmaceutical sales grew +6% YoY to IDR 67 billion, 5% of net sales.
- Amid the covid-19 outbreak and physical distancing, SIDO has launched 14 new products, most related to enhancing the immune system.
- As SIDO was able to maintain their sales in 2Q2020 while almost all economic and business activities stopped, we now expect SIDO sales in the 2nd semester of 2020 will grow faster.
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Maintain double-digit bottom line growth
Valuation: Maintain BUY with TP 1,570
- Because of lower operating expenses due to the implementation of cost efficiencies, SIDO maintained their double-digit bottom line growth of +11% YoY to IDR 414 billion in the 1H2020.
- Operating profit grew +7% YoY to IDR 508 billion with a slight increase in operating profit margin from 34% to 35%. Net profit margin also increased from 27% to 28% .
- Gross profit grew +3% to IDR 781 billion and the gross profit margin was stable at 54%.
- We expect SIDO sales in 2020F to reach IDR 3.2 trillion which is single digit growth but we keep a double-digit bottom line growth target as we expect SIDO’s strategy to improve operational efficiency will continue to have an impact throughout 2020.
Valuation: Maintain BUY with TP 1,570
- We are targeting SIDO to reach IDR 1,570 or 24% upside, which is a 23x PE valuation within one year. Maintain BUY.
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