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30% Upside, BUY
2nd June, 2021
Price Rp 1450
Target price Rp1880
Investment Consideration
1Q2021: Positive sales growth
- KLBF recorded record net sales of IDR 6.02 trillion, up 3.8% YoY in 1Q2021.
- Distribution & logistics and consumer health sectors recorded positive growth of 11.7% and 2.7% respectively in 1Q2021. Distribution and logistics was the largest contributor with 33% of total sales, IDR 2.0 trillion. Consumer health contributed 17% of total sales, IDR 1.02 trillion.
- Nutrition contributed 26% of total sales, IDR 1.58 trillion which is a slight decline of -1% YoY. Pharmaceutical was stable and contributed 23% of total sales, IDR 1.39 trillion.
- Most of KLBF segments recorded slightly lower margins YoY except distribution and logistics. Consumer health gross profit margin decreased to 53% in 1Q2021 from 54%, while distribution and logistic GPM slightly increased to 25% from 24%. Pharmaceutical and nutrition GPM was 53% from 54%.
- With the positive results and high demand in 1Q2021, we expect better growth in the next quarters. The management has revised their 2021 target growth from 5%-6% to 7%-9%. We are targeting single digit growth for KLBF sales in 2021 to reach IDR 24.2 trillion.
Stable Margin
- KLBF recorded +1.1% gross profit growth in 1Q2021 to IDR 2.65 trillion, inline with a higher cost of revenue +6% YoY. This resulted in a lower gross profit margin, and was due to higher growth in lower gross margin products .
- KLBF still maintained their overall margin though, due to efficiency at the operating level. Operating profit increased by +4.3% YoY to IDR 926 billion, while the operating profit margin was stable at 15.4% YoY in 1Q2021
- The net profit margin increased slightly to 11.9% and net income grew by a single digit +7.1% YoY to IDR 716 billion in 1Q2021.
- We are forecasting KLBF net profit to reach IDR 2.88 trillion, which is growth of +6% YoY.
Valuation: BUY TP 1,880 with 30% upside
- We are targeting KLBF to trade at 29x PE within a year. Target Price is IDR 1,880 which represents 30% upside. BUY