Recovery Underway
Key Takeaways
• SIDO recorded revenue at IDR1.00tn in 3Q22 (+36.91% QoQ/-10.70% YoY), bringing 9M22’ revenue to IDR2.61tn or dropped -5.86% YoY.
• This bounce back on QoQ basis was supported by Herbal and Supplement which grew +45.23% QoQ followed by F&B +26.15% QoQ and Pharmacy +1.10% QoQ.
• Net income recorded at IDR274.85bn in 3Q22, (+82.55% QoQ/-24.39% YoY), which thus led the NPM expanding to 27.44% (vs 20.58% in 2Q22). Meanwhile, the 9M22 net income was recorded at IDR720.45bn or tumbled -16.76% YoY.
• We see the management strategies for recovery in 2H22 is currently in positive track. SIDO managed to penetrate the product effectively through outlet coverage expansion reached 151K in 9M22 or exceeded the guidance in FY22E of 141K.
• Brand awareness stayed solid given the management maintains its promotional and attractive digital marketing strategies. We see A&P cost/revenue in 3Q22 to be quite stable at 10.06% (vs 10.00% 5-year avg.).
• Going forward, we see that the recovery strategy will continue and gradually grant positive results mainly by outlet expansion, digital channel optimization and product innovation.
• We focus on the weakening USD/IDR as ~20% of raw material that are indirectly impacted by the strengthening USD. In addition, the risk of economic slowdown has potentially to disrupt the supply of products.
• We keep our concern to the inflation rate which can affect sales volume, where the Oct-22 inflation hit +5.71% YoY. We see a similar scenario in FY14-FY15, where SIDO's revenue declined on the back of the rising inflation at pace +8% YoY.
• We maintain our HOLD recommendation for SIDO with target price of IDR780, implies PE/PBV of 22.47x/6.39x in FY22E. We see that SIDO is still recovering and such a factor has become challenging onward
MNCS Research
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