SIDO
Contact our analyst Eka
24% upside, BUY
6th May 2024
Price Rp 720
Target price Rp 895
6th May 2024
Price Rp 720
Target price Rp 895
Positive growth in all business segments
- SIDO's sales increased by 16% YoY to IDR 1.05 trillion in Q1 2024, driven by heightened demand during the Ramadan season and election-related spending, with volume increases across all business segments in both domestic and export markets.
- In the herbal and supplement segment, sales rose by 13.3% YoY to IDR 626.8 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 71.5% for the segment.
- The pharmaceutical segment saw a 30% YoY increase to IDR 30.4 billion, following reversal of a ban on all syrup medicines, with a recovery in sales and volume pushing the GPM to 38%.
- F&B sales climbed by 20% YoY to IDR 396 billion, supported by significant growth in energy drinks and vitamin C-enhanced beverages. The F&B margin improved to 42%, aided by higher volume and lower prices for key raw materials such as taurine, citric acid, and creamer.
- Export sales contributed 7% to total sales in Q1 2024, up from 5.6% in the previous year. The Philippine market accounted for 1-2% of total sales, Malaysia 3%, and Nigeria 1-2%.
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Q1 2024 Result: Higher bottom line
2024F Guidance and Valuation
- SIDO's net profit rose by 30% YoY and 7.3% QoQ to IDR 390.5 billion, due to reduced operating expenses from efficiencies in general and administrative expenses and improved operating leverage, achieving a record net profit margin (NPM) of 37.1% in Q1 2024.
- Cost of goods sold (COGS) decreased by -5.6% QoQ but increased slightly by 1% YoY to IDR 428 billion, as lower raw material costs coupled with increased sales volume led to a higher gross profit of IDR 625 billion, a 29.4% YoY increase, with a GPM of 59.3%.
- Operating income also grew by 33% to IDR 491 billion, as general and administrative expenses fell by -12.7%.
2024F Guidance and Valuation
- Management has maintained its 2024 forecast, targeting 10% growth in both top line and bottom line, with margin improvements due to softer raw material prices. Despite the challenges, we continue to recommend SIDO as a BUY. We expect purchasing power to normalize this year. Our target price (TP) is IDR 895, representing 24% upside, with a projected P/E ratio of 21x.
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