SIDO
Contact our analyst Eka
27% upside, BUY
29th July 2024
Price Rp 705
Target price Rp 900
29th July 2024
Price Rp 705
Target price Rp 900
Gradually Higher Contribution of Export Sales
- SIDO's sales increased by 12.9% YoY but declined -20% QoQ to IDR 843.06 billion in Q2 2024, driven by volume increases across all business segments and in both domestic and export markets. For the 1H2024 total sales increased +14.7% to IDR 1.89 trillion.
- In terms of export sales, the total export sales contribution is gradually increasing, with the 1H2014 contribution to total sales at 8%, up from 5.8% in the previous year. The Philippine market accounted for 1-2% of total sales, Malaysia 4%, and Nigeria 1-2% in the 1H2014. Management is targeting to boost the export sales contribution to 10% - 15% in the next three years.
- In the herbal and supplement segment, sales rose by 8.1% YoY to IDR 486 billion, propelled by double-digit growth in Tolak Angin Group, Esemag, and soft capsule SKUs. This surge resulted in an elevated gross profit margin (GPM) of 69.4% for the segment, helped also by lower prices of some raw materials.
- The pharmaceutical segment saw a 12.3% YoY and 17.6% QoQ increase in sales to IDR 35.77 billion, following the reversal of a ban on all syrup medicines, with a recovery in sales and volume pushing the GPM to 38.3%.
- F&B sales climbed 21.2% YoY to IDR 320.6 billion, driven by energy drinks in domestic and export markets and sales of vitamin C-enhanced beverages. The F&B margin improved to 39.6%, aided by lower prices for key raw materials such as taurine, aspartame, citric acid, creamer, among others.
- We expect higher 2H2024 sales as, demand is seasonally higher in the second half of the year.
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Q2 2024 Result: Margin improvement
Valuation: Maintain Buy, TP 900
- SIDO's net profit rose by 47.5% YoY but declined -44% QoQ to IDR 217.9 billion, due to reduced operating expenses from efficiencies in general and administrative expenses and improved operating leverage, resulting in a record net profit margin (NPM) of 25.9% in Q2 2024, higher compared to Q2 2023’s 19.8%. For 1H2024 net profit also increased 35.8% to IDR 608.5 billion with an improved NPM at 32.1%.
- Cost of goods sold (COGS) decreased by -14.9% QoQ but increased slightly by 3.5% YoY to IDR 364 billion, and lower raw material costs coupled with increased sales volume led to a higher gross profit of IDR 478.5 billion, a 21.3% YoY increase, with a GPM of 56.8%.
- Operating income also grew by 38,6% to IDR 267.9 billion, as general and administrative expenses fell by -30.3% in 2Q2024.
Valuation: Maintain Buy, TP 900
- With margin improvements from softer raw material prices and an expect demand increases in 2H2024, we continue to recommend SIDO as a BUY. Our target price (TP) is IDR 900, representing 25% upside, with a projected P/E ratio of 20x.
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