SIMP
Contact our analyst Revita
90% upside, Buy
3rd February 2023
Current price Rp 420
Target price Rp 800
3rd February 2023
Current price Rp 420
Target price Rp 800
9M22 CPO production up 5%
As of 9M22, SIMP produced 551,000 tons of CPO, an increase of +5% compared to the same period last year. FFB nucleus production was flat YoY at 2,1 million tons inline with unfavourable weather particularly in the 1H22. In 9M22, total sales volume of CPO was down -11% YoY to 459 thousand tons while palm kernel production also decreased -4% YoY. We adjust our target for total FFB and CPO in 2022 to 3.628 million tons and 721 thousand tons respectively. We expect production in 2022 will remain affected by unfavourable weather but will slightly increase YoY inline with last year’s growth.
As of 9M22, SIMP produced 551,000 tons of CPO, an increase of +5% compared to the same period last year. FFB nucleus production was flat YoY at 2,1 million tons inline with unfavourable weather particularly in the 1H22. In 9M22, total sales volume of CPO was down -11% YoY to 459 thousand tons while palm kernel production also decreased -4% YoY. We adjust our target for total FFB and CPO in 2022 to 3.628 million tons and 721 thousand tons respectively. We expect production in 2022 will remain affected by unfavourable weather but will slightly increase YoY inline with last year’s growth.
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Double-digit EBITDA growth
Despite flat growth of production during 9M22, SIMP recorded an increase in core profit for the period by 45% to IDR 1.16 trillion. In 9M22, SIMP group reported a total sales decrease of -13% YoY primarily due to lower sales of edible oil & fats which was partly offset by higher average sales prices of palm products. SIMP group reported EBITDA of IDR. 3.36 trillion or up +14% YoY and bottom line profit for the period increased +45% YoY. The EBITDA margin in 9M22 was still a high 24% despite the slower revenue growth. We estimate EBITDA margins during 2022-2023F will remain higher than 2021A at 25% and 24% respectively inline with higher palm product prices during 2022F-2023F.
Valuation: Significant upside
We estimate a TP within one year of IDR 800, which is an EV/EBITDA of 4.40x or trading at 9.37x PER. With 90% upside, our recommendation is BUY.
Despite flat growth of production during 9M22, SIMP recorded an increase in core profit for the period by 45% to IDR 1.16 trillion. In 9M22, SIMP group reported a total sales decrease of -13% YoY primarily due to lower sales of edible oil & fats which was partly offset by higher average sales prices of palm products. SIMP group reported EBITDA of IDR. 3.36 trillion or up +14% YoY and bottom line profit for the period increased +45% YoY. The EBITDA margin in 9M22 was still a high 24% despite the slower revenue growth. We estimate EBITDA margins during 2022-2023F will remain higher than 2021A at 25% and 24% respectively inline with higher palm product prices during 2022F-2023F.
Valuation: Significant upside
We estimate a TP within one year of IDR 800, which is an EV/EBITDA of 4.40x or trading at 9.37x PER. With 90% upside, our recommendation is BUY.
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