UNVR Oct 2023

UNVR

Contact our analyst Eka

29% Upside, BUY
31st October 2023
Price Rp 3790
Target price Rp 4900

Volume growth in 3Q2023

UNVR’s total sales slightly increased by +1% YoY or +5% QoQ to IDR 10.21 trillion due to unit volume growth of +4.3% and adjusted pricing for increased competitiveness in 3Q2023. In 9M2023, UNVR's sales still decreased by -3.28% to IDR 30.5 trillion.
Both domestic and export sales declined by -4.5% and -34.8%, respectively.
Food & Refreshment (FR) sales increased by +2% YoY or +9% QoQ to IDR 3.5 trillion in 3Q2023, in line with a higher FR gross profit margin (GPM) of 45%.
Home and Personal Care (HP) slightly increased by +1% YoY or +4% to IDR 6.67 trillion, and HP GPM also increased to 53% from 47%.
As UNVR's volume starts picking up in 3Q2023 and is expected to continue into 4Q2023, while maintaining margin improvement in 2023F, we target UNVR's sales to reach IDR 40.5 trillion in 2023F.

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3Q2023 Results: Maintaining higher margins

UNVR maintained a higher gross profit margin at 50.5% in 3Q2023, thanks to higher volumes, softer commodity prices, and optimization programs in factories, distribution, logistics, and promotions.
Gross profit increased by +12.1% YoY or +5.5% QoQ to IDR 5.15 trillion.
Despite advertising and market research costs increasing by +22% YoY in 3Q2023, operating profit still increased by +19% YoY or +3.3% QoQ to IDR 1.83 trillion. The OPM improved to 17.9% from 15.2%.
UNVR's bottom-line profit reached IDR 1.35 trillion, an increase of +21% YoY or +5.6% QoQ, while the net profit margin improved to 14%.

Valuation: Maintain BUY with TP 4,900

Looking ahead, we expect UNVR's margins to continue improving in 2023F in line with greater efficiency. Therefore, we maintain our recommendation to BUY with a target price of IDR 4,900, representing 29% upside or a 33x PE within a year.

Previously

UNVR Jul2023