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23% Upside, BUY
16 August 2022
Price Rp 1595
Target price Rp 1970
Positive Growth Maintained
- KLBF maintained positive growth in 2Q2022 with sales of IDR 7.16 trillion, up +7.9% YoY but lower -2.2% QoQ. For 1H2022, KLBF net sales increased +7% YoY to IDR 13.8 trillion.
- Most of KLBF’s businesses recorded positive growth in 2Q2022 compared to last year, while for 1H2022, nutrition sales slightly decreased -1% YoY.
- Consumer health grew +16.2% YoY to IDR 1.14 trillion but recorded a GPM decrease to 52% from 61% in 2Q2021. Consumer health’s GPM was affected by higher commodity and raw material prices such that cost of revenue increased by +42% YoY.
- Distribution & logistics recorded growth of +6.4% YoY to IDR 2.47 trillion while the GPM decreased to 20% from 25%.
- Pharmaceuticals sales grew +8% YoY growth to IDR 1.41 trillion while the GPM declined to 45% from 53% due to changes in the product mix as well as higher aw material prices.
- Nutrition recorded positive growth of +5.3% to IDR 1.88 trillion while the GPM declined to 51% from 41% due to raw material price increases.
- We expect KLBF will maintain positive sales growth, and expect 2022F sales to reach IDR 29.1 trillion or +11% growth.
2Q2022: Lower Margin
- Despite positive growth in sales, KLBF recorded lower margins quarterly and yearly due to higher raw material and commodity prices.
- In 2Q2022, KLBF net profit was up +3% YoY but -4% QoQ to IDR 802 billion with a lower NPM of 11.7%. For 1H2022, KLBF recorded a net profit increase of +9% YoY to IDR 1.64 trillion with a lower NPM of 11.8%.
- KLBF gross profit increased +4% YoY but was lower by -2% QoQ in 2Q2022 to IDR 2.87 trillion with COGS increasing +11% YoY due to higher commodity prices and raw material costs. This resulted in a lower gross profit margin of 41.8%.
- Operating profit also decreased -4% QoQ but was higher +4% YoY at IDR 1.04 trillion with a lower operating profit margin of 15.2%.
- We are forecasting KLBF 2022F net profit will grow +8% YoY to reach IDR 3.45 trillion.
Valuation: BUY TP 1,970 with 23% upside
- We are targeting KLBF to trade at 24x PE within a year. Target Price is IDR 1,970 which represents 23% upside. We maintain our recommendation to BUY.