SIDO
Contact our analyst Eka
30% upside, Buy
11th May 2022
Price Rp 935
Target price Rp 1220
11th May 2022
Price Rp 935
Target price Rp 1220
Maintaining Double-digit Growth
- SIDO maintained double-digit sales growth of +11% YoY to IDR 880.5 billion in the 1Q2022 boosted by higher pharmaceutical sales and F&B sales in line with higher demand for Covid-19 treatment products such as paracetamol, cough syrup, multivitamin, etc.
- Pharmacy had the highest growth at +42% YoY to IDR 42.7 billion in 1Q2022.
- The F&B segment also increased +20% YoY to IDR 308.7 billion in 1Q2022 driven by strong export sales and increased demand domestically as mobility restrictions were eased. For F&B, an ASP hike is expected in 2Q2022 because of higher raw material prices and to mitigate margin compression.
- Herbal & supplement sales remain stable with +4.6% growth YoY to IDR 529 billion in line with volume and demand increases in 1Q2021.
- Export sales were up 125% in 1Q2022 and their contribution to sales continues to increase from 4% in 2021 to 5% in 1Q2022. The growth was driven by higher demand during Ramadan in Negeria and Malaysia, while Philippine sales are back to their pre-covid level. SIDO also expanded sales to Senegal and Benin in 2Q2022.
- Positive sentiment from the reopening of Indonesia Hajj and Umrah is expected to boost Tolak Angin demand.
- We maintain our double-digit sales growth forecast for 2022F as we expect higher demand for health products.
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1Q2022 Result: Slightly Lower Margins
Valuation: Maintain BUY with TP 1,220
- Despite margin contraction due to higher raw material costs, SIDO still recorded net profit growth of +9.7% YoY to IDR 295 billion with a slightly lower NPM of 33.5% compared to 1Q2021’s 33.9%.
- Operating profit margins were stable at 41.7% in 1Q2022 as operating efficiencies offset cost pressure. Operating profit still grew 10.6% YoY to IDR 367.1 billion.
- Gross profit grew +7.6% YoY to IDR 481.8 billion in 1Q2022 with a lower GPM of 54.7% from 56.5% in 1Q2021.
- With efficiencies and demand growth, we are targeting SIDO’s net profit to grow +17% to IDR 1.98 trillion in 2022F.
Valuation: Maintain BUY with TP 1,220
- We are targeting SIDO to reach IDR 1,220 or 30% upside, which is a 21x PE valuation within one year. Maintain BUY.
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