UNVR
Contact our analyst Eka
23% Upside, BUY
26th July 2023
Price Rp 4050
Target price Rp 5000
26th July 2023
Price Rp 4050
Target price Rp 5000
Business Improvement
- UNVR's business showed an improvement in 2Q2023 after a drop in 4Q2022.
- Total sales decreased by -8.7% QoQ or -8.8% YoY to IDR 9.68 trillion due to reduced consumer spending, soft volumes, and adjusted pricing for increased competitiveness. The closure of several B2B and B2C e-commerce players at the end of 2022 continues to impact sales in 2Q2023. In 1H2023, UNVR sales decreased by -5.5% to IDR 20.3 trillion.
- Both domestic and export sales declined by -9.3% and 21.7% respectively.
- Food & Refreshment (FR) sales decreased -7.4% YoY to IDR 3.25 trillion in 2Q2023, while Home and Personal Care (HP) also decreased -9.5% YoY to IDR 6.43 trillion.
- However, UNVR maintained margin improvement in 2Q2023, with the gross margin in HP reaching 53.6%, and operating margins increasing to 27.1% in 2Q2023.
- FR GPM also increased to 44.1% in 2Q2023, while the OPM decreased to 19.4%.
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2Q2023 Results: Strong margin
Valuation: Maintain BUY with TP 5,000
- Despite lower sales, UNVR achieved the highest gross margin from the last eight quarters, 50.5%, in 2Q2023, attributed to softer commodity prices and optimization programs in factories, distribution, logistics, and promotions.
- Gross profit decreased by -6.6% QoQ or -3.6% YoY to IDR 4.88 trillion, with a higher GPM of 50.5%.
- Operating profit decreased by -4.7% QoQ or -4.0% YoY to IDR 1.76 trillion. However, the OPM improved to 18.3% from 17.5% in 1Q2023 due to a lower promotion cost of -31.5% YoY to IDR 310 billion.
- UNVR's bottom line profit reached IDR 1.35 trillion, lower by -3.6% QoQ or -3.9% YoY, while the net profit margin improved to 14%.
Valuation: Maintain BUY with TP 5,000
- Looking ahead, we expect UNVR margins to continue improving in 2023F in line with greater efficiency. Therefore, we maintain our recommendation to BUY with a target price of IDR 5,000, representing 23% upside or 32x PE within a year.
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