A Magnificent and Enduring Year Awaits
Key Takeaways :
▪️4Q23 net profit accumulated to IDR1.9 tn (+33.1% YoY), translating into FY23 net profit of IDR8.1 tn (+28.0% YoY). These figures are in-line with our/consensus estimates, reflecting 100.5%/98.7% of the FY23 target.
▪️In Mar-24, HMSP strengthened its partnership by adding hand-rolled clove cigarette (SKT) production facilities in Karanganyar, Central Java. This expansion brings the total new SKT manufacturing facilities to five. We believe the addition of SKT facilities can serve as a buffer for revenue streamlining, given the tendency toward affordable selling prices.
▪️Assuming a payout ratio of 100%-101%, the anticipated DPS is IDR69.6-70.3/share, giving a possible div. yield of 8.3%-8.4% based on current prices. Meanwhile, the avg. dividend yield over 5Y was +5.4%.
▪️We recommend BUY for HMSP with a TP of IDR1,080/share, implying PE/PBV of 15.0x/4.3x in FY24E. We project revenue/net profit growth in FY24E to be +2.1% YoY/+3.2% YoY, respectively. We anticipate that this will be backed by a +7.0% YoY rise in the SKT segments, as well as ASP adjustments to sustain profits.
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