UNVR
Contact our analyst Eka
15% Upside, BUY
30th July 2024
Price Rp 2460
Target price Rp 2830
30th July 2024
Price Rp 2460
Target price Rp 2830
Sales decline from boycott continues
- The sales decline continued in Q2 2024, UNVR sales decreased by -7.5% YoY or -11% QoQ, to IDR 8.96 trillion. As a result, UNVR sales in 1H2024 fell -5.46% to IDR 19.04 trillion, due to lower prices and volume from demand weakness as some Indonesian consumers are still avoiding multinational brands (boycott). The price decline was -5% YoY, with volume falling -2% YoY.
- Both domestic and export sales declined by -6.9% YoY and -24.4% YoY, respectively.
- In the Food & Refreshment (FR) segment, sales decreased by -4.1% YoY or -14.1% QoQ to IDR 3.12 trillion, with the FR gross profit margin (GPM) remaining stable at 44%.
- The Home and Personal Care (HP) sector experienced a sales decline of -9.2% YoY or -9.4% QoQ to IDR 5.84 trillion. The HP GPM declined to 52% from 54%.
- We expect modest growth for 2024F and that sales will recover gradually as the impact of the boycott eases and UNVR rebuilds market share.
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Q2 2024 Results: Lower margins
Valuation: Maintain BUY with lower TP 2,830
- The sales decline also impacted bottom line profit, UNVR reported a net profit decline of -25% YoY to IDR 1.01 trillion with the net profit margin (NPM) decreasing to 11.4%. The decline was also caused by the impact of higher advertising and market research costs which rose by 20%, and promotion costs which were also higher by 6.4% in 2Q2024. As a result, the advertising and promotion to sales ratio increased to 12.9%.
- A reduction in trademark, technology, and service fees of -11.4% YoY in Q2 2024 did not significantly reduce the decline in operating profit of -26.1% YoY to IDR 1.31. The operating profit margin (OPM) also decreased to 14.6% from 18.3% in Q2 2023.
- Despite lower COGS by -5.6% YoY and stable raw material costs, gross profit still declined by -9.2% YoY to IDR 4.43 trillion with the GPM at 49.5% compared to Q2 2023’s 50.5%.
Valuation: Maintain BUY with lower TP 2,830
- Looking ahead, we expect the boycott effect will ease gradually, and sales will be higher in 2H2024. We maintain our BUY recommendation with a target price of IDR 2,830 or +15% upside, corresponding to a 20x PE target within a year.
Previously