UNVR Feb2024

UNVR

Contact our analyst Eka

36% Upside, BUY
16th February 2024
Price Rp 2930
Target price Rp 4000

Sales decline while margin Increases

UNVR’s total sales declined by -16.3% YoY or -20.6% QoQ to IDR 8.1 trillion as consumers avoided multinational company brands due to the geopolitical situation in the Middle East in 4Q2023. In FY2023, UNVR's sales still decreased by -6.33% to IDR 38.6 trillion, the weakest performance since 2015.
Both domestic and export sales declined by -5.2% and -30.9%, respectively in 2023. In 4Q2023, domestic and export sales declined even further by -15.3% and -38.9%, respectively.
Food & Refreshment (FR) sales decreased by -11.8% YoY or -18.8% QoQ to IDR 2.87 trillion in 4Q2023, while FR gross profit margin (GPM) increased to 45% from 39%.
Home and Personal Care (HP) decreased by -18.6% YoY or -21.6% QoQ to IDR 5.22 trillion, and HP GPM also increased to 50% from 44%.
In January 2024, UNVR saw some improvement in customer and consumer uptake. We forecast margin improvement to be maintained in 2024F, and target UNVR's sales to reach IDR 39.7 trillion in 2024F.

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4Q2023 Results: lower bottom line, Higher GPM

UNVR maintained a higher gross profit margin at 48.4% in 4Q2023 compared to 42.6% in 4Q2022, though still lower than 3Q2023, thanks to softer commodity prices and optimization programs in factories, distribution, logistics, and promotion. Gross profit therefore only decreased by -4.8% YoY to IDR 3.92 trillion due to lower cost of goods sold by -25% YoY.
Advertising and market research costs increased by 14% YoY in 4Q2023, resulting in a lower operating profit, -21.5% YoY or -55% QoQ to IDR 823 billion. The OPM declined to 10.2% from 15.2%.
UNVR's bottom-line profit reached IDR 612 billion, a decrease of -18.7% YoY or -57% QoQ, while the net profit margin declined to 7.6%. UNVR's profit in 4Q2023 is the lowest quarterly profit in 2023.

Valuation: Maintain BUY with lower TP 4,000

Looking ahead, we expect UNVR's margins to continue improving in 2024F in line with greater efficiency. The UNVR share price has now reached its lowest since 2011, resulting in a 36% upside to our target of IDR 4,000. We maintain our recommendation to BUY with a 26.7x PE target within a year.

Previously

UNVR Oct 2023