Contact our analyst Eka

13 June 2022

Price Rp 6,925

Target Rp 9,000

Investment Considerations

Double digit sales growth

INDF recorded double digit sales growth of +11.8% YoY or + 3.4% QoQ in 1Q2022 to IDR 27.4 trillion with higher contributions from Bogasari and ICBP.

ICBP grew 16.3% YoY to IDR 16.9 trillion while ICBP’s EBIT margin decreased to 19.5% from 23.8% last year from higher raw material prices.

Bogasari also maintained double-digit sales growth to IDR 7.57 trillion up +25.8% YoY or +3.8% QoQ. Bogasari’s EBIT also increased +18.4% with an ASP hike in 1Q2022, while the EBIT margin decreased slightly to 7.2% due to higher raw material prices.

Agribusiness sales declined by -12.9% or -27.5% to IDR 4.08 trillion in 1Q2021 due to a decline in CPO sales volume.

Agribusiness EBIT jumped by +121.8% to IDR 1.03 trillion in line with an EBIT margin increase from 10% last year to 25.35% in 1Q2022, due to higher CPO prices.

Distribution revenue increased +6.7% to IDR 1.43 trillion with a higher EBIT margin of 7.4%.

As higher CPO prices and wheat prices will continue in 2022F, we expect a strong sales performance, with double-digit growth of +12.6% YoY to IDR 111.8 trillion.

1Q2022: Margin Improve

With strong sales growth, INDF profit also improved, INDF 1Q2022 net profit grew +36.5% YoY or +5.7% QoQ to IDR 2.36 trillion. The NPM also improved to 8.6% from 7.0% last year.

INDF’s profit before tax also increased +21% YoY to IDR 4.21 with lower finance expenses, -32% YoY.

Operating income grew +6.1% YoY or +12% QoQ to IDR 5.2 trillion in 1Q2022 with a higher QoQ OPM from 17.5% in 4Q2021 to 19% in 1Q2022.

INDF’s gross profit grew +6% YoY or +7.6% QoQ to IDR 9.04 trillion with an improved GPM from 31.7% in 4Q2021 to of 32.9%.

With margin improvements in 1Q2022 and strong wheat and CPO prices in 2022, we expect double-digit growth in INDF’s profit of +15.6% YoY to IDR 8.8 trillion in 2022F.

Valuation: Maintain BUY with TP 9,000

We are targeting INDF to reach IDR 9,000 or 30% upside, which is an 8x PE valuation within one year. Maintain BUY.