UNVR Jul2021

UNVR

Contact our analyst Eka

17% Upside, Hold
27th July 2021
Price Rp 4,500
Target price Rp 5,270

2Q2021 Margin Drop

The domestic market remains challenging as large parts of Indonesia have entered lockdown (PPKM) following a sharp rise in Covid-19 cases.
UNVR sales declined high single digit -6.8% YoY and -3.8% QoQ to IDR 9.89 trillion in 2Q2021. For 1H2021, UNVR’s sales also decreased -7.33% YoY to IDR 21.77 trillion.
Home and Personal care (HP) contributed the most at 67%. HP gross profit margin decreased to 52% in 2Q2021 lower compared to 57% in 2Q2020 and 56% in 1Q2021. Operating margins for HP also decreased to 29% from 36% in 2Q2020 and 31% in 1Q2021.
Meanwhile the Foods & Refreshment (FR) GPM was higher compared to last year at 43% from 35%, but lower than 1Q2021’s 46%. OPM was stable at 12%, but lower compared to 1Q2021’s 18%.
The PPKM will continue until August which will affect purchasing power in the domestic market in 3Q2021. We expect lower sales in 3Q2021, but a slight recovery after the PPKM ends.

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2Q2021FY Results Lower

With a decrease in sales, UNVR booked net profit of IDR 1.34 trillion down by -23.3% YoY from IDR 1.75 trillion in 2Q2020, and down -21% QoQ. The net profit margin also fell from 16.5% in 1Q2021 to 13.6% in 2Q2021.
Operating profit also decreased by -22.9% YoY and -18.6% QoQ o IDR 1.81 trillion from an increase in marketing expenses in 2Q2021. The OPM also decreased to 18.3% from 22.1% last year.
Gross profit declined -8.6% YoY -3.8% QoQ to IDR 9.8 in 2Q2021 due to lower sales with a lower GPM of 49% from 52.4 in 1Q2021.
As the 2Q2021 result was below our expectations, we revise our net profit target to IDR 7.08 trillion in 2021F.

Valuation: HOLD with TP 5,270

As the domestic market remains challenging and 1H2021 UNVR results are below expectations, we revise our UNVR target.
We are targeting UNVR to trade at 26.7x PE within a year. Target Price is IDR 5,270 which represents 17% upside. HOLD

Previously

UNVR May2021