UNVR Oct2021

UNVR

Contact our analyst Eka

9% Upside, Hold
26th October 2021
Price Rp 4580
Target price Rp 5000

3Q2021 Margin continue to decreased

The sharp increase in COVID-19 cases in June-July 2021, which was followed by a lockdown (PPKM) resulted in a decrease in UNVR sales and a decrease in volume in 3Q2021. UNVR sales decreased -8% YoY ti IDR 9.85 trillion. For 9M2021, UNVR sales still decreased -7.5% YoY to IDR 30 trillion.
The increase in commodity prices also has an impact on increasing COGS. This is reflected in the depressed margins in each segment.
Home and Personal care (HP) gross profit margin decreased to 51% in 3Q2021 lower compared to 54% in 3Q2020 and 52% in 2Q2021. Operating margins for HP also decreased to 27% from 32% in 3Q2020 and 29% in 2Q2021.
The Foods & Refreshment (FR) GPM also lower compared to last year at 45% from 51%. While OPM was higher at 17% compared to 3Q2020’s 11%.
With the decline in the PPKM rate, we expect that conditions will return to normal as domestic purchasing power improves. We expect 4Q2021 sales to be better than the previous quarter.

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Revised down

With a decrease in sales, UNVR booked net profit of IDR 1.33 trillion down by -26.7% YoY from IDR 1.82 trillion in 3Q2020, and down -1.1% QoQ. The net profit margin also fell from 17% in 3Q2020 to 13.5% in 3Q2021. For 9M2021 net profit still decline -19.5% YoY to IDR 4.37 trillion.
Operating profit also decreased by -24.7% YoY and -2% QoQ o IDR 1.77 trillion. The OPM also decreased to 18% from 22% last year.
Gross profit declined -15% YoY to IDR 4.8 in 3Q2021 due to lower sales and higher COGS with a lower GPM of 49% from 53.2% in 3Q2020.
As the 3Q2021’s performance has not recovered and is still under pressure along with rising commodity prices, we revised down our target of UNVR with net profit still falling -14% to IDR 6.12 trillion in 2021F.

Valuation: HOLD with TP 5,000

We are targeting UNVR to trade at 29x PE within a year. Target Price is IDR 5,000 which represents 9% upside. HOLD

Previously

UNVR Jul2021