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24% Upside, BUY
6th April, 2021
Price Rp 1550
Target price Rp1920
Investment Consideration
4Q2020: Record Sales
- As of 4Q2020, KLBF recorded record net sales of IDR 6.02 trillion, up 3.6% YoY and 9.5% QoQ. Full year net sales slightly increased 2.1% YoY to IDR 23.1 trillion in 2020.
- Distribution and logistics is the largest contributor with 37% of total sales, IDR 2.25 trillion, up +8.8% YoY.
- Nutrition is next with a 30% contribution at IDR 1.81 trillion up 1.7% YoY. Pharmaceutical contributed 20% of total sales with IDR 1.21 trillion and Consumer health contributed 12% with IDR 739.9 billion.
- Consumer health gross profit margin increased to 57% in 2020FY from 55% in 2019, but distribution and logistic GPM decreased to 25% from 27%. Other segments maintained their GPMs
- As consumers become more aware about health, the demand for consumer health and nutrition products keeps growing.
- With the positive results, we are targeting single digit growth for KLBF sales in 2021 to reach IDR 23.7 trillion.
Margin continue to Improve
- KLBF maintained margins due to efficiency at the operating level.
- Amid single digit sales growth, cost of revenue increased +6.2% YoY in 4Q2020 which resulted in a slightly lower gross profit -0.2% YoY to IDR 2.47 with a lower gross profit margin (GPM) of 41.1% in 4Q2020. For 2020, gross profit increased slightly to IDR 10.25 trillion with a lower GPM of 44.3% vs 45.3% in 2019.
- KLBF maintained their operating margins with lower selling expenses, down by -6% YoY in 2020. Operating profit increased by +6.6% YoY to IDR 3.63 trillion with a higher operating profit margin (OPM) of 15.7% vs 15% in 2019, in line with a higher OPM in 4Q2020 up from 14.3% to 15.6%.
- The net profit margin also increased slightly to 11.8% and net income grew by a single digit +9% YoY to IDR 2.73 trillion in 2020. The net profit achievement was higher than we expected, so that for 2021.
- We are forecasting KLBF net profit will reach IDR 3.05 trillion, growth of +12% YoY. KLBF still maintained their margin due to efficiency at the operating level.
Valuation: BUY TP 1,920 with 24% upside
- We are targeting KLBF to trade at 28x PE within a year. Target Price is IDR 1,920 which represents 24% upside. BUY