Kimia Farma(KAEF IJ)

Transcription

1 Equity Research Results Note Monday,30 July 2018 HOLD Maintain Last price (IDR) 2,380 Target Price (IDR) 2,170 Upside/Downside -8.8% Previous Target Price (IDR) 1,910 Stock Statistics Sector Bloomberg Ticker Pharmaceutical KAEF IJ No of Shrs (mn) 5,554 Mkt. Cap (IDRbn/USDmn) 13,219/917 Avg. daily T/O (IDRbn/USDmn) 1.9/0.1 Major shareholders (%) REPUBLIC OF INDONESIA 90.0 Estimated free float 10.0 KAEF relative to JCI Index Source : Bloomberg Kimia Farma(KAEF IJ) Solid performance Kimia Farma reported robust 2Q18 earnings growth of 28.7% yoy and 127.9% qoq, which led to 1H18 net profits of IDR122bn (+28.3% yoy), on the back of solid revenues with continued high gross and operating margins. With the expectation of a stronger second half, the 1H18 result is in line to achieve our FY18 earnings forecast (32% of FY18F). Solid 1H18 top line growth of 29% yoy. KAEF reported 2Q18 revenues of IDR1.9tn, +33% yoy and +28.3% qoq, which led to 1H18 revenues growth of 29.1%. From past meetings with the management, we learnt that the existing 5 factories are already running at full capacity with 3 shifts/day, supported by mounting drug orders from the e-catalog. The increasing amount of drugs supplied to BPJS Kesehatan will support the company s volume and revenues this year, we believe. The 1H18 top line is 47% of our FY18F, i.e. in line. Strong 1H18 earnings. In 2Q18, Kimia Farma reported a high gross margin of 36.9% (1Q18: 34.7%), giving rise to a high 1H18 gross margin of 35.9%. The management stated that increasing production volume helped the company to secure longer-term raw materials supply, supporting margins. On the operating front, the company reported higher opex to revenues of 30.9% (1Q18: 28.9%), following the preparation to commence new plants as well as the opening of more pharmacies and clinics this year. Higher interest expenses were offset by higher other income, allowing the company to book an improved net margin of 4.4% in 2Q18. In 1H18, KAEF reported a 1H18 bottom line of IDR122bn, +28.3% yoy. The 1H18 net profit is 32% of our FY18F, i.e. in line. Maintain HOLD with a TP of IDR2,170. The government s support for the National Health Program should translate into more budget spending ahead, benefiting Kimia Farma (around 40% of its revenues come from government programs). It is also worth noting that the upstream-to-downstream expansion will help pave the way for more efficiencies in the future. At the current share price, KAEF is trading at FY18F PE of 34.7x. Maintain HOLD. x Natalia Sutanto (62-21) ext.3508 natalia.sutanto@danareksa.com Key Financials Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Revenue (IDRbn) 5,811 6,127 7,301 9,052 10,709 EBITDA (IDRbn) EBITDA Growth (%) Net profit (IDRbn) EPS (IDR) EPS growth (%) BVPS (IDR) DPS (IDR) PER (x) PBV (x) Dividend yield (%) EV/EBITDA (x) Source : KAEF, Danareksa Estimates See important disclosure at the back of this report 1

2 Exhibit 1. Revenues and Growth Exhibit 2. Net Profits and Growth Exhibit 3. Margins Exhibit 4. Gearing Level See important disclosure at the back of this report 2

3 Exhibit 5. 2Q18 result 2Q17 1Q18 2Q18 yoy qoq 1H17 1H18 yoy 2018F A/F Revenue, IDR bn 1,438 1,490 1, % 28.3% 2,636 3, % 7,301 47% COGS , % 23.9% 1,699 2, % 4,691 Gross profit % 36.5% 937 1, % 2,610 Opex % 37.1% 818 1, % 2,073 Operating profit % 33.9% % % Pretax profit % 16.6% % 525 Net profit % 127.9% % % Gross margin 40.7% 34.7% 36.9% 35.5% 35.9% 35.8% Operating margin 6.1% 5.8% 6.0% 4.5% 5.9% 7.4% Pretax margin 6.4% 6.4% 5.8% 5.2% 6.1% 7.2% Net margin 4.6% 2.5% 4.4% 3.6% 3.6% 5.2% Debt to equity 59.9% 96.8% 117.7% 59.9% 117.7% 100.1% See important disclosure at the back of this report 3

4 Exhibit 6. Income Statement Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Revenue 5,811 6,127 7,301 9,052 10,709 COGS (3,948) (3,926) (4,691) (5,881) (6,994) Gross profit 1,864 2,202 2,610 3,171 3,715 EBITDA Oper. profit Interest income Interest expense (60) (86) (156) (193) (242) Forex Gain/(Loss) (4) Income From Assoc. Co s Other Income (Expenses) Pre-tax profit Income tax (111) (118) (138) (150) (164) Minority interest (4) (5) (6) (7) (9) Net profit Core Net Profit Exhibit 7. Balance Sheet Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Cash & cash equivalent ,778 1,524 1,579 Receivables ,006 1,190 Inventory 967 1,192 1,068 1,274 1,515 Other Curr. Asset Fixed assets - Net 1,281 2,012 3,031 3,578 3,763 Other non-curr.asset Total asset 4,613 6,096 7,652 8,305 8,971 ST Debt ,602 1,602 2,002 Payables ,051 1,317 1,566 Other Curr. Liabilities Long Term Debt ,198 1, Other LT. Liabilities Total Liabilities 2,341 3,224 4,489 4,770 5,034 Shareholder'sFunds 2,221 2,513 2,796 3,160 3,551 Minority interests Total Equity & Liabilities 4,613 5,799 7,353 8,005 8,668 See important disclosure at the back of this report 4

5 Exhibit 8. Cash Flow Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Net income Depreciation and Amort Change in Working Capital (19) (465) 422 (93) (176) OtherOper. Cash Flow (109) Operating Cash Flow , Capex (390) (795) (1,115) (724) (372) Others Inv. Cash Flow Investing Cash Flow (382) (779) (1,089) (692) (342) Net change in debt 498 1,197 1, New Capital Dividend payment (50) (53) (98) (76) (88) Other Fin. Cash Flow (70) (89) (141) (177) (225) Financing Cash Flow 378 1, (246) (304) Net Change in Cash (253) 55 Cash - begin of the year ,778 1,524 Cash - end of the year ,778 1,524 1,579 Exhibit 9. Key Ratios Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Growth (%) Sales EBITDA Operating profit Net profit Profitability (%) Gross margin EBITDA margin Operating margin Net margin ROAA ROAE Leverage Net Gearing (x) Interest Coverage (x) Source : KAEF, Danareksa Estimates See important disclosure at the back of this report 5

6 See important disclosure at the back of this report 6