Thriving From Tailwinds via Outlet Expansions and Price Leaps
Key Takeaways :
• FY22 Revenue dropped -3.9% YoY to IDR3.9tn (vs IDR4.0tn in FY21) on the back of lower herbal demand due to inflation hikes in 1H22. The actualized revenue captured 102.1%/102.2% of our and consensus’ estimates, respectively.
• Net profit came at IDR1.1tn in FY22, or slipped by -12.39% YoY (vs IDR1.3tn in FY21). The results reflected 105.1%/104.5% of our and consensus’ estimates, respectively. This decline was due to a lower operating profit (-11.6% YoY) following a jump in operating expenses by +8.5% YoY in FY22.
• SIDO managed to expand the outlets coverage to 156k in FY22 (vs 135k in FY21) to eastern Indonesia, which could increase product absorption and thus lower DIO levels. Moreover, management successfully maintained freight cost at 1-2% of total revenue in FY22 amid rising global oil prices.
• We conducted on-the-ground checks to compare the cold-symptom herbal remedies prices in several MT (modern trade) outlets. We notice that Bintang Toedjoe raised the the 15ml single sachet. Tolak Angin followed suit by raising the price by 9-10% MoM in Jan-23 for per sachets and multiple piece packagings. We believe that the increase of ASP in MT outlets should improve margins onwards, especially by targeting the mid-high segment which tends to be resilient during inflation hikes.
• SIDO has launched 7 new products dominated by Ready-To-Drink (RTD), including Alang Sari Cool with a massive distribution reaching 100,000 GT (general trade). However, we hold a moderate view, as we see that the products sold are 15% more premium compared to the average peers (exhibit 05)
• We upgrade SIDO IJ to BUY with a TP of IDR970, implying PE/PBV of 24.4x/8.2x in FY23E. Management targets 10% YoY top-bottom line growth, continue to penetrate export markets (China e-Com, Vietnam, and Western Africa), and maintains a DPR of 90%. Downside risks include: 1) lower purchasing power; 2) lower than expected export sales.
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