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SRIL

Contact our analyst Eka
Double digit growth, 43% upside.
19 July 2019
Price Rp 350
Target price Rp500
Higher US sales
  • While the trade war has weighed on market conditions, SRIL has increased export sales to the United States (US).
  • As of 1H2019, SRIL net sales increased 16.2% to USD 631.6 million from USD 543.8 million in 1H2018.
  • The Spinning segment dominated with a sales contribution of 40.1%. The Finishing segment and Garment segment contributed 26.73% and 26.74% respectively, while Weaving contributed 6.4%.
  • Export sales contributed 59.8% in 1H2019 net sales, or USD 377.7 million and grew by 29.4% YoY compared to 1H2018 USD 291.7 million.
  • Higher 1H2019 export sales came from higher US’s sales which jumped 3.2x or contributed 13.6% to export sales and were worth USD 51.35 million from USD 15.98 million in 1H2018.
Better margin
  • As of 1H2019, SRIL recorded net profit of USD 63.25 million up 12.3% YoY compared to 1H2018 USD 56.33 million. The 2Q2019 net profit was USD 35.2 million up significantly by 25.5% compared to 1Q2019 net profit of USD 28.05 million. The net profit margin in 2Q2019 is getting better at 11.2% compared to 1Q2019 8.9%.
  • Gross profit grew 34% YoY to USD 131.1 million and give a positive impact to the 2Q2019 Gross profit margin of 21.1% higher compared to 2Q2018 17.9% and slightly up from 1Q2019 20.5%.
  • As SRIL is focusing on increasing utilization to 90% for all business segments and targeting higher margins in their Finishing and Garment segments in 2019, we expect SRIL’s net profit to grow 14% YoY to USD 96.15 million in 2019F.
Valuation: Maintain Buy TP 500, 43% Upside
  • We are targeting SRIL to trade at 7x 2020F PE, which is around IDR 500 per share or 43% potential upside within one year. Maintain BUY
Read the full report
Previously
SRIL Sept 2018
SRIL Sept2017
​SRIL 13june2017.pdf
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