Kalbe Farma (KLBF IJ)

Transcription

1 Equity Indonesia Consumer Kalbe Farma (KLBF IJ) BUY (Unchanged) StockData Target price (Rp) Prior TP (Rp) Shareprice (Rp) Rp2, Rp1,97 Rp1,78 Upside/downside (%) Sharesoutstanding (m) 47 Marketcap. (US$ m) 6 Free float (%) 43.3 Avg. 6m dailyt/o (US$ m) Price Performance n/a 3M 6M 12M Absolute (%) (1.1) Relative to JCI (%).3 (.6) 4. 2whigh/low (Rp) 1,78-1, May 19-Aug 19-Nov 19-Feb 19-May Major Shareholders Kalbe's Founders 6.7% Estimate Change; Vs. Consensus 21F 216F Latest EPS (Rp) Vs. Prior EPS (%) (1.6) (18.8) Vs. Consensus (%) (4.6) (4.) Source: Bloomberg JCI KLBF A bitter pill for a healthy future Expect demand recovery in 2H1 Nutritionals has the highest growth potential Revise revenue and EPS growth to 8.2% and 12.% for FY1F Retain Buy rating at a new TP of Rp2, 2 May 21 Company Update Mediocre growth for FY1F.We expect Kalbe to deliver mediocre performance this year and a gradual turnaround is only expected to start in 2H1 as April and May sales have yet to see a strong pickup, based on our discussions with the company. We believe Kalbe s performance should be better in the remaining quarters on seasonality, while we expect the commencement of government infrastructure projects to lend further support and Kalbe s continuous marketing activities to start translating into revenues. We estimate revenue growth of 8.2% and 12.3% in FY1F and FY16F, respectively with the nutritionals division being the growth driver. Nutritionals a panacea.we expect margins to expand for Kalbe s nutritional division,given that raw material prices, especially skimmed milk powder, havedeclined by 4% since last year speak, and high-cost inventory has been cleared. We believe the strong support for Kalbe s nutritionals division is coming from thecompany s winning strategy of effective below-the-line marketing campaigns, e.g.fun walks.also, the additional powdered and liquid milk facilities should help accelerate its penetration into Indonesia s low dairy consumption per capita market, in our view. We believe Kalbe s focus on a niche segment should also allow it to maintain large margins, given it has more flexibility to pass through cost increases to consumers. Earnings revised downward.we have slashed our overly optimistic revenue assumptionsby 8.7% and 9.%, but increased our gross margin by 1bps and 17bps for FY1F and FY16F, respectively. As a result, our revenue/eps growth rates fall to 8.2% and 12.3%/12.% and 18.6% within the same period. Given our expectation ofmacro improvement and the full commencement of the government s infrastructure projects, weexpect a strong recovery starting 216 this should helpdrive Kalbe s 14.1% EPS CAGR over FY1F-18F. Retain Buy at TP Rp2,. We acknowledge a lack of near-term catalysts to support share performance, but we see the recent weakness as a strong entry point for long-term investors.we keep our Buy rating and roll-over our valuation to FY16F with a new TP of Rp2,, based on 34x FY16F earnings. We apply a premium to Kalbe given the company s strong brand equity, sturdy balance sheet, robust innovation pipeline, and pricing stability. A sharp depreciation in Rp currency and steep increase in commodity prices would act as downside risks. JuliantoWongso PT Indo Premier Securities julianto.wongso@ipc.co.id Year To 31 Dec 213A A 21F 216F 217F Revenue(RpBn) 16,2 17,369 18,788 21,1 23,744 EBITDA(RpBn) 2,734 3,7 3,387 3,963 4,693 EBITDA Growth (%) Net Profit(RpBn) 1,92 2,6 2,313 2,742 3,27 EPS (Rp) EPS Growth (%) Net Gearing (%) (9.9) (16.3) (2.7) (22.9) (2.) PER (x) PBV (x) Dividend Yield (%) EV/EBITDA (x) Source : KLBF,IndoPremier Share Price Closing as of : 1-May-21

2 Fig. 1: Revenue and net profit growth Fig. 2: Gross margins remain healthy (%yoy) Sales growth Net profit growth (%) Prescription Pharma Consumer Health Nutritionals Distribution F 216F F F Source : Kalbe Farma; IndoPremier Source : Kalbe Farma; IndoPremier Fig. 3: Skimmed milk prices declined 4% from FY14 s peak Fig. 4: Stronger 2H sales on a seasonal basis (EUR/MT) Skimmed Milk 1H 2H 3,6 3,3 3, 2,7 2,4 2,1 1,8 1, Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-1 Feb-1 Mar-1 Apr-1 May-1 1% 9% 8% 7% 6% % 4% 3% 2% 1% % Source : Bloomberg; IndoPremier Source : Kalbe Farma; IndoPremier Fig. : P/E Band Chart (Rp) Fig. 6: Historical P/E (x) 2, 2, 1, 1, 37.8x 31.1x 24.3x 17.6x 1.9x 4.2x (38.x) (29.3x) (2.7x) (12.x) (3.3x) (+2 STD) (+1 STD) (Mean) (-1 STD) (-2 STD) Jan-6 Aug-6 Mar-7 Oct-7 May-8 Dec-8 Jul-9 Feb-1 Sep-1 Apr-11 Nov-11 Jun-12 Jan-13 Aug-13 Mar-14 Oct-14 May-1 Source : Bloomberg; Kalbe Farma; IndoPremier Source : Bloomberg; IndoPremier 2

3 Tab.1:Earnings revision Old New Change FY1F FY16F FY1F FY16F FY1F FY16F (Rpbn) (Rpbn) (Rpbn) (Rpbn) (%) (%) Sales 2,84 23,663 18,788 21,1-8.7% -1.8% Prescription Pharma,,76 4,761, % -7.4% Consumer Health 3,488 4,116 3,363 3, % -6.1% Nutritionals,642 6,771,46 6, % -.8% Distribution 6,448 7,2,28,21-18.% -21.3% Gross profit 1,21 11,688 9,426 1,81 -.9% -7.% Prescription Pharma 2,938 3,367 2,94 3,23-1.1% -3.4% Consumer Health 1,884 2,223 1,883 2,166.% -2.6% Nutritionals 3,329 4,62 3,27 3,7-9.1% -8.9% Distribution 1,87 2,36 1,611 1, % -16.9% Operating profit 3,719 4,42 3,91 3, % -2.4% Net profit 2,736 3,37 2,313 2,742-1.% -18.8% Margins Gross margin (%) 48.7% 49.4%.2% 1.2% 1.% 1.8% Prescription Pharma (%) 8.7% 8.% 61.% 61.% 2.3% 2.% Consumer Health (%) 4.% 4.% 6.% 6.% 2.% 2.% Nutritionals (%) 9.% 6.% 6.% 8.% -3.% -2.% Distribution (%) 29.% 29.% 3.6% 3.6% 1.6% 1.6% Operating margin (%) 18.1% 19.2% 16.% 17.1% -1.6% -2.1% Net margin (%) 13.3% 14.3% 12.3% 13.% -1.% -1.3% Source: Bloomberg; IndoPremier Tab.2:Peer comparison Company Ticker P/E Revenue Growth EPS Growth ROE (x) (x) (x) (%) (%) (%) (%) (%) (%) (%) (%) (%) Indofood CBP ICBP IJ Indofood SM INDF IJ Unilever Indonesia UNVR IJ Mayora Indah MYOR IJ (1.4) Nippon Indosari ROTI IJ GudangGaram GGRM IJ Kalbe Farma KLBF IJ Kimia Farma KAEF IJ SidoMuncul SIDO IJ (.8) Tempo Scan TSPC IJ (22.6) TigaPilar AISA IJ Simple Average Source: Bloomberg; IndoPremier

4 Year To 31 Dec (RpBn) 213A A 21F 216F 217F Income Statement Net Revenue 16,2 17,369 18,788 21,1 23,744 Cost of Sales (8,323) (8,893) (9,362) (1,289) (11,317) Gross Profit 7,679 8,476 9,426 1,81 12,426 SG&A Expenses (,13) (,71) (6,33) (7,197) (8,132) Operating Profit 2,49 2,761 3,91 3,614 4,294 Net Interest Forex Gain (Loss) 1 14 (36) Others-Net 1 (22) (22) (22) (22) Pre-Tax Income 2,73 2,764 3,93 3,668 4,374 Income Tax (62) (643) (719) (83) (1,17) Minorities (1) (6) (61) (73) (87) Net Income 1,92 2,6 2,313 2,742 3,27 Balance Sheet Cash & Equivalent 1,426 1,89 2,826 3,474 4,318 Receivable 2,273 2,347 2,499 2,86 3,18 Inventory 3,3 3,91 3,234 3, 3,91 Other Current Assets , Total Current Assets 7,497 8,121 9,426 1,789 12,436 Fixed Assets - Net 2,926 3,44 4,28 4,84,77 Goodwill Non Current Assets ,89 1,198 Total Assets 11,31 12,42 14,444 16,462 18,71 ST Loans Payable 1,31 1,133 1,41 1,69 Other Payables 26 1,1 1,11 1,211 1,332 Current Portion of LT Loans Total Current Liab. 2,641 2,386 3,3 3,22 3,27 Long Term Loans 44 Other LT Liab Total Liabilities 2,81 2,68 3,198 3,467 3,763 Equity Retained Earnings 7,633 8,91 1,28 11,986 13,886 Minority Interest Total SHE + Minority Int. 8, 9,817 11,24 12,994 14,946 Total Liabilities & Equity 11,31 12,42 14,443 16,461 18,71 Source : KLBF,IndoPremier 4

5 Year to 31 Dec 213A A 21F 216F 217F Cash Flow Net Profit 1,97 2,121 2,374 2,81 3,37 Depr. & Amortization Changes in Working Capital (86) (48) (33) (497) (61) Others (144) (322) 28 (121) (18) Cash Flow From Operating 1,146 1,86 2,89 2,47 3,37 Capital Expenditure (1,26) (732) (1,1) (1,) (1,1) Others Cash Flow From Investing (976) (669) (919) (899) (869) Loans 379 (288) 24 Equity (41) Dividends (96) (797) (929) (1,41) (1,371) Others Cash Flow From Financing 12 (1,84) (693) (1,3) (1,326) Changes in Cash 322 (166) 1, FinancialRatios Gross Margin (%) Operating Margin (%) Pre-Tax Margin (%) Net Margin (%) ROA (%) ROE (%) ROIC (%) Acct. Receivables TO (days) Acct. Receivables - Other TO (days)..... Inventory TO (days) Payable TO (days) Acct. Payables - Other TO (days)..... Debt to Equity (%) Interest Coverage Ratio (x)..... Net Gearing (%) (9.9) (16.3) (2.7) (22.9) (2.) Source : KLBF,IndoPremier

6 Head Office PT INDO PREMIER SECURITIES Wisma GKBI 7/F Suite 718 Jl. Jend. Sudirman No.28 Jakarta Indonesia p f Institutional Equity & Private Client Benny B. Soebagjo Head of Equities benny.soebagjo@ipc.co.id Angkula Ruriawan Equity Sales angkula.ruriawan@ipc.co.id Alexander Salim Equity Sales alexander.salim@ipc.co.id Edward Azizy Equity Sales edazizy@ipc.co.id Henry Sutanto Equity Sales henry.sutanto@ipc.co.id Isna Alfiathi Equity Sales isna.alfiathi@ipc.co.id Angky Amarylis Sales Trader angky.amarylis@ipc.co.id Thomas Samuil Sales Trader thomas.samuil@ipc.co.id INVESTMENT RATINGS BUY : Expected total return of 1% or more within a 12-month period HOLD : Expected total return between -1% and 1% within a 12-month period SELL : Expected total return of -1% or worse within a 12-month period ANALYSTS CERTIFICATION. The views expressed in this research report accurately reflect the analyst;s personal views about any and all of the subject securities or issuers; and no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in the report. DISCLAIMERS This reserch is based on information obtained from sources believed to be reliable, but we do not make any representation or warraty nor accept any responsibility or liability as to its accruracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for general circulation. Any recommendations contained in this document does not have regard to the specific investment objectives, finacial situation and the particular needs of any specific addressee. This document is not and should not be construed as an offer or a solicitation of an offer to purchase or subscribe or sell any securities. PT. Indo Premier Securities or its affiliates may seek or will seek investment banking or other business relationships with the companies in this report.