20 April 2022

Price Rp 6,200

Target Price Rp 8,615

Investment Considerations

Strong sales growth QoQ

After a strong 3Q2021, INDF maintained double digit sales growth of +15.6% YoY or + 4% QoQ in 4Q2021 to IDR 26.5 trillion. For 2021FY, INDF’s sales grew +21.6% YoY to IDR 99.34 trillion.

ICBP grew 10.5% YoY to IDR 14.6 trillion and Agribusiness had the fastest growth, +33.5% to IDR 5.6 trillion in 4Q2021 from higher CPO prices.

ICBP had a lower EBIT margin of 19.7% from 22.1% last year from a higher cost of goods sold in line with higher raw material prices.

Agribusiness EBIT margin increased from 21.8% last year to 23.5% in 4Q2021 mainly due to higher CPO prices.

Bogasari also booked double-digit sales growth to IDR 7.3 trillion up +15.8% YoY or +11.2% QoQ and had a higher EBIT margin of 9.5% from 8.7% last year.

Distribution sales were stable at IDR 1.15 trillion with a higher EBIT margin of 3.4%.

As higher CPO prices and wheat prices continue in 2022F, we expect a better sales performance in 2022F, with double-digit growth of +12.8% YoY to IDR 112 trillion.

4Q2021: Strong Bottom line

INDF 4Q2021 net profit grew +12.9% QoQ but was lower -17.4% YoY to IDR 2.23 trillion with a higher QoQ net profit margin of 8.4% from 7.7% in 3Q2021 inline with lower finance expenses and higher profit from joint ventures.

For 2021FY, INDF net profit reached IDR 8.82 trillion, up +15.4% YoY with a slightly lower NPM of 7.7% from 7.4% last year.

Operating income grew +24% YoY or +9% QoQ to IDR 4.6 trillion in 4Q2021 with a higher QoQ OPM from 14.7% in 3Q2021 to 17.5%. OPM in 2021 was higher at 17% from 15.8% from higher operating income growth of +31% YoY to IDR 16,8 trillion.

INDF’s gross profit grew +6.1% YoY or +3% QoQ to IDR 8.4 trillion with a lower GPM of 31.7%.

We believe INDF will maintain a good performance in 2022 from strong wheat and CPO prices, and we expect double-digit growth in INDF’s profit of +15.4% YoY to IDR 8.8 trillion in 2022F.

Valuation: Maintain BUY with TP 8,615

We are targeting INDF to reach IDR 8,615 or 39% upside, which is an 8x PE valuation within one year. Maintain BUY.