SIDO
Contact our analyst Eka
29% Upside
22nd October 2020
Price Rp 760
Target price Rp 980
22nd October 2020
Price Rp 760
Target price Rp 980
Positive Sales Improvements
- In the 3rd Quarter SIDO’s business segments all showed positive improvements. Despite weak purchasing power, SIDO’s 3Q 2020 result was better compared to the 2Q.
- For the 9M 2020, SIDO sales grew +6% YoY to IDR 2.26 trillion with domestic sales the driver.
- Demand for healthy beverage products such as Vit C and Ginger beverages was still high in 3Q2020.
- The F&B segment grew fastest with +19% growth YoY to IDR 722 bn, while the Pharmacy and Herbal and Supplement segments recorded positive-growth of +1% YoY to IDR 92.8 bn and IDR 1.4 tn respectively.
- SIDO export sales are recovering gradually with Malaysia average monthly sales already back to pre covid-19 levels. Meanwhile the Philippine and Nigeria markets haven’t yet shown significant recovery.
- SIDO has still managed to expand the number of export markets with the first export shipments of Tolak Angin to Saudi Arabia starting in August. SIDO is still targeting a 2% sales contribution from export sales for the rest of this year.
- SIDO has launched 14 new products year to date, and new products contributed 1.5%-2% to revenue in the 9M2020.
- We are expecting stable to single digit sales growth in 4Q2020 on the back of the stronger 3Q2020 results and growing consumer demand for health products.
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Maintain double-digit bottom line growth
Valuation: Maintain BUY with TP 980
- In 9M2020, SIDO still maintained double-digit bottom line growth of +11% YoY to IDR 641 billion.
- Operating profit grew +8% YoY to IDR 786 billion with operating profit margins maintained at 35%. The net profit margin increased from 27% to 28% in 9M2020 .
- Gross profit grew +5% to IDR 1.22 trillion and the gross profit margin was stable at 54%.
- We maintain our targets of 2020F sales to reach IDR 3.2 trillion which is single digit growth together with a double-digit bottom line growth as we expect more sales growth in the 4Q2020 after the positive 3Q2020 result.
Valuation: Maintain BUY with TP 980
- SIDO did a 1:2 stock split on 14th September 2020, so the number of shares has increased from 14.9 bn to 30 bn.
- As SIDO showed positive improvements in the 3Q2020, We are targeting SIDO to reach IDR 980 or 29% upside, which is a 29x PE valuation within one year. Maintain BUY.
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