SIDO
Contact our analyst Eka
30% upside, BUY
9th May 2023
Price Rp 795
Target price Rp 1030
9th May 2023
Price Rp 795
Target price Rp 1030
Pharmacy sales declined
- Pharmacy sales were negatively affected by the new syrup medicine regulations on the use of ethylene glycol (EG) and diethylene glycol (DEG) in syrup medicine in Indonesia in early 2023.
- SIDO sales increased +3% YoY but declined -27.5 % QoQ to IDR 907 billion.
- Pharmacy sales declined -45.5% YoY or -17.7% QoQ to IDR 23 billion due to pending BPOM test results, which are required in order to resume distribution. Seven SKUs out of sixteen have been allowed to be distributed again as of the end of March 2023 and will resume selling in April 2023. The rest are still waiting for the results of the BPOM testing. Pharmacy also recorded a lower margin of 24.9% in 1Q2023 from last year’s 39.8%.
- Herbal & supplement sales increased by +4.5% YoY but declined -43.3 QoQ to IDR 330.7 billion. The herbal & supplement margin was lower compared to 4Q2022 at 67.6% due to higher raw material costs such as sugar, packaging and some herb ingredients.
- F&B sales also increased +7% YoY or +34% QoQ to IDR 330.7 billion in 1Q2023 due to a positive response to the launch of Alang Sari Cool. Despite the raw material price increases, F&B margins continued to improve QoQ to 31.2% in 1Q2023.
- With demand expected to continue to increase and with an expected pharmacy segment recovery in 2H2023, we expect SIDO top line in 2023F to reach IDR 4.25 trillion or +10% growth.
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1Q2023 Result: More Operating efficiency
Valuation: BUY with TP 1.030
- Despite a decline in pharmacy sales, SIDO 1Q2023 bottom line profit was stable with better a margin QoQ due to opex efficiency.
- SIDO net profit was IDR 300.2 billion, up slightly by +1.8 YoY, and down -22% QoQ, but with a higher QoQ NPM of 33.1%.
- Operating income was stable YoY at IDR 369.5 billion due to operating expenses efficiency which reduced advertising and promotion costs by -31.7%. This resulted in a better QoQ operating profit margin of 40.7% in 1Q2023.
- As SIDO managed to offset the decline in pharmacy sales with greater efficiency in costs, we are now expecting SIDO profit to reach IDR 1.27 trillion for 2023F or +16% growth.
Valuation: BUY with TP 1.030
- We maintain our recommendation to BUY. We are targeting SIDO to reach IDR 1.030 or 30% upside, which is a 22x PE valuation within one year. BUY.
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