SIDO Oct2021

SIDO

Contact our analyst Eka

20% upside, Buy
21st October 2021
Price Rp 860
Target price Rp 1030

3Q2021 Highest Sales QoQ

SIDO recorded sales growth of 41% YoY or 30% QoQ to IDR 1.12 trillion in 3Q2021. 3Q2021 sales were boosted by higher demand in the domestic market from a reaction to the rising number of covid-19 cases in Indonesia which increased in June-July 2021. For 9M2021, SIDO booked +23% sales growth or IDR 2.77 trillion. The results are on track to match our 2021 sales estimate.
The herbal & supplement segment increased +36% YoY or 27% QoQ to IDR 706.6 billion in line with volume and demand increases in 3Q2021. Tolak Angin sales increased more than 40% YoY in 3Q2021 and more than 20% in 9M2021. The F&B segment increased +47.4% or +39% QoQ to IDR 373 billion in 3Q2021.
Meanwhile pharmacy had the highest growth at +65% YoY or +14% QoQ to IDR 41.9 billion in 3Q2021 after a decline in 1H2021.
For Export sales, Nigeria and Malaysia are still the top export destinations. SIDO export sales increased by 39% contributing 2.6% of total sales in 9M2021. SIDO is still targeting an export sales contribution of 4% in 2021.
We are still expecting double-digit sales growth in 2021F as we expect better demand in 4Q2021 inline with growing consumer demand for health products and as the vaccination program is expected to normalize economic activity.

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3Q2021 Result: record profit

In 3Q2021, SIDO recorded net profit growth of +60% YoY or +56% QoQ to IDR 363.5 billion with a higher NPM of 32.4% compared to 2Q2021’s 27%. For 9M2021, SIDO recorded net profit of IDR 865.5 billion with a higher NPM of 31.2%. The profit growth was helped by stable raw material prices and efficient operations. The OPEX to sales ratio was 18%, which is lower compared to the historical ratio of 20%-21%.
Operating profit grew in 3Q2021 by +64.4% YoY to IDR 457.7 billion and the operating profit margin increased to 40.8% from 34% in 2Q2021. For 1H2021, operating profit grew +22% to IDR 620.7 billion with a higher OPM of 38.8%.
Gross profit grew +45% YoY to IDR 631.8 billion in 3Q2021 with a higher GPM of 56.3% from 54.7%. For 9M2021, gross profit grew +28.3% YoY to IDR 1.56 trillion with a higher GPM of 56.3%.
We revise up our target growth for 2021F net profit to +17% or IDR 1.48 trillion based on the excellent profit performance in 3Q2021.

Valuation: Maintain BUY with TP 1,030

We are targeting SIDO to reach IDR 1,030 or 20% upside, which is a 25x PE valuation within one year. Maintain BUY.

Previously

SIDO Jul2021