Company Update / Consumer Staples / IJ / Click here for full PDF version
Author(s): Lukito Supriadi ;Andrianto Saputra
- 's 1Q24 net profit of Rp958bn (+11.9% yoy) came above our/consensus estimate at 28/30% vs. 5yr average of 25%.
- On top of one-off expense reversal in 1Q23 of Rp68bn, lower promotion as % of sales at 6.8% (vs. 1Q23's 7.8%) helped to offset GPM decline.
- We fine-tuned FY24F earnings by -1% and maintain our HOLD rating with TP of Rp1,620 with US$ appreciation as key risk for .
1Q24 results: EBIT and net profit beat as sales were in-line
posted 1Q24 net profit of Rp958bn (+11.9% yoy), this was above ours/consensus at 28/30% vs. 5yr average of 25%. Sales growth of 6.3% yoy was in-line with company guidance of 6-7%. GPM declined -120bps yoy to 39.7%, which may be partly caused by Rupiah's depreciation against US$ of -5.7% yoy in 1Q24. Overall opex/sales ratio improved 117bps yoy to reach 25.1%. Additionally, there were one-off expenses reversal in 1Q23 (Rp68bn from forex loss and inventory write off) further boosting NPM to 11.4% in 1Q24 vs. 10.9% in 1Q23.
Pharma was the key driver as consumer health disappoints
Separately, the increase in drug price (8-10% yoy) indication from our hospitals' channel check did not positively translate into 's pharmaceutical sales (+4.0% yoy) as ASP hike was more selective for 's pharmaceutical SKUs and reached only c.1-2% ASP hike on a blended basis in 1Q24F. The consumer health segment did not benefit from 'Promag' (antacid)'s seasonal sales in 1Q24F fasting season, remaining flattish due to the high base. Nutritional also posted a mere 1.9% yoy growth. On the other hand, 's distribution segment grew +14.9% yoy. Notably, segmental information was restated such that part of revenues and gross profit of 'distribution' segment are redistributed to the other segments.
Growth engines (biologics& med. device) remained intact
's strategic growth driver in biologics (c.10% of pharma sales) is expected to grow strongly with biosimilar sales' strong organic growth and commercialization of novel biologics products (PD1 and long acting Epo) in 2H24. Similarly, medical device is expected to also grow strongly leveraging on the local content push from the government for JKN's e-catalogue.
Maintain HOLD with unchanged TP of Rp1,620 as currency risk looms
Nonetheless, we note that may be quite vulnerable to stronger US$given c.90% of raw material (c.29% of COGS ) is linked to US$.Based on our sensitivity analysis, 's net profit may decline by -6.2% for every 5% US$ appreciation against Rp (linkto note). We fine-tune our FY24F earnings by -1% on the back of 1Q24 results. In sum, we maintain our HOLD rating for with unchanged TP of Rp1,620 based on 22.5x FY24F PE (-1s.d. from its 5yr mean). Key risk is further US$ appreciation against Rupiah.
Sumber : IPS