SIMP
Contact our analyst Revita
Significant upside, Buy
12 July 2023
Current price Rp 442
Target price Rp 1120
12 July 2023
Current price Rp 442
Target price Rp 1120
Flat CPO production in 1Q23
In 1Q23, SIMP produced 144,000 tons of CPO, a modest increase of +1.4% compared to the same period last year. Total FFB production remained flat year-on-year at 752,000 tons, with higher purchases of FFB externally and lower FFB nucleus production. During this period, total sales volume of CPO increased by 48% YoY to 151,000 tons, and palm kernel production also saw a 29% YoY increase. Our adjusted targets for total FFB and CPO production in 2023 are 3.928 million tons and 773 thousand tons, respectively. Despite unfavorable weather conditions, we expect production in 2023 to show single-digit growth.
In 1Q23, SIMP produced 144,000 tons of CPO, a modest increase of +1.4% compared to the same period last year. Total FFB production remained flat year-on-year at 752,000 tons, with higher purchases of FFB externally and lower FFB nucleus production. During this period, total sales volume of CPO increased by 48% YoY to 151,000 tons, and palm kernel production also saw a 29% YoY increase. Our adjusted targets for total FFB and CPO production in 2023 are 3.928 million tons and 773 thousand tons, respectively. Despite unfavorable weather conditions, we expect production in 2023 to show single-digit growth.
Sign up here to trade what you want, when you want & wherever ⬇️ you are ⬇️
Double-digit EBITDA growth
Following the flat production growth in 1Q23, SIMP experienced a -49% decrease in net core profit for the period, amounting to IDR 150.3 billion. There was a slight increase of 0.25% YoY in total revenue in 1Q23, primarily due to higher sales volumes of palm products and edible oils & fats, but this growth was offset by lower average selling prices. EBITDA for the group in 1Q23 was IDR 731 billion, down -36% YoY. Despite the slower revenue growth, the EBITDA margin during 1Q23 remained high at 17%. We anticipate EBITDA margins to remain higher than 2021A, reaching 22% and 23% in 2023-2024F, respectively, in line with higher palm product prices projected during 2023F-2024F.
Valuation: significant upside
Based on the 1Q23 results, we have adjusted our one-year target price (TP) estimation to IDR 1,120, which corresponds to an EV/EBITDA of 2.96x an EV/ha of USD 3332/ha, and a 15.7x PER. Considering the significant upside potential, we recommend a BUY.
Following the flat production growth in 1Q23, SIMP experienced a -49% decrease in net core profit for the period, amounting to IDR 150.3 billion. There was a slight increase of 0.25% YoY in total revenue in 1Q23, primarily due to higher sales volumes of palm products and edible oils & fats, but this growth was offset by lower average selling prices. EBITDA for the group in 1Q23 was IDR 731 billion, down -36% YoY. Despite the slower revenue growth, the EBITDA margin during 1Q23 remained high at 17%. We anticipate EBITDA margins to remain higher than 2021A, reaching 22% and 23% in 2023-2024F, respectively, in line with higher palm product prices projected during 2023F-2024F.
Valuation: significant upside
Based on the 1Q23 results, we have adjusted our one-year target price (TP) estimation to IDR 1,120, which corresponds to an EV/EBITDA of 2.96x an EV/ha of USD 3332/ha, and a 15.7x PER. Considering the significant upside potential, we recommend a BUY.
Previously
