Gearing Up into FY24F
Key Takeaways :
▪️ 3Q23 net profit came at IDR2.5tn, up +54.4% QoQ/+32.4% YoY, leading to 9M23 net profit of IDR6.2tn (+26.6% YoY). These figures are slightly above our estimates, achieving 77.0% of the FY23E target.
▪️ We estimate HMSP’s flagship products to rise 11%-13% in FY24F due to excise tax hikes, such as Sampoerna A Mild'16 to be IDR35,700-36,200/pack. We anticipate consumers’ loyalty and purchasing power to be compromised as the consequences of these price hikes. However, we see SKT and SPT segments continuing to act as buffers for future profitability, benefiting from favorable excise tax rates.
▪️ HMSP has introduced its latest product, Sampoerna Splash Royal. In our view, Splash Royal's presence not only complements the Splash line (fruit flavors) but also taps into the potential market for berry-flavored cigarettes with a cool sensation.
▪️ We maintain our BUY recommendation for HMSP with a TP of IDR1,250, implying PE/PBV of 16.5x/5.0x in FY24F. Currently, HMSP is trading at a level of -1.0 STD PE ratio (5-year average) of 14.7x. We favor HMSP due to its resilient and sizable SKT segment, we believed SKU improvements could provide a higher market share in the future.
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