SIDO - Capex absorption below 20%ytd

Industri Jamu dan Farmasi Sido Muncul (SIDO) stated that the absorption of capex is still below 20% so far. The company allocates this year capex amounting IDR197 bn, which mostly used for maintenance of existing production facilities. SIDO is targeting sales growth that tends to be conservative this year, namely in the range of 10% to 15%. (Source : Kontan). Comment : Aside from maintenance expenditure, consistent capex spending for investment cycle will create sigificant difference to overall long term growth. We think SIDO will fully absorb this year capex. We also believe sales guidance figures were sounds reasonable and tend to be achievable.