INDF - Inline 9M23, expecting better 4Q23

KBVS Update
Thursday, 9 Nov 2023

INDF: Inline 9M23, expecting better 4Q23
(Reiterate BUY, with TP of IDR8,020)

•    INDF 9M23 net profit grew by 52.4% yoy to IDR7.08 tn, came in within ours and street expectation at a run-rate of 74.3%/73.4% (5yr historical average of 72.4%).

•    INDF 3.8% yoy net sales growth was mainly driven by inched downed sales growth from Bogasari (-1% yoy) and lower agribusiness segment at 4% yoy. Bogasari has made price adjustment by around 10%-12% to accommodate lower wheat prices, following raising prices in FY21 and FY22. Meanwhile, despite higher sales volume (CPO 12% yoy and PK, PKO, PKE +16% yoy), agribusiness segment saw -3.9% yoy sales growth due to lower asp.

•    INDF recorded GP margin at 31.2% or 20bps higher yoy, while in 3Q23 stand alone, margin expansion recorded better by 63bps yoy and 132bps stronger qoq to 31.9%. NP margin was 269bps higher to 8.4% in 9M23.

•    We expect INDF to post better quarterly result in 4Q23. Using the assumption of 5yr historical average PATMI in 4Q to FY of 29.1% and putting the same on that portion to ours / consensus expectation for INDF net profit this year, then FY23 PATMI figures could arrives at IDR9.85 tn (55.0% yoy) / IDR9.81 tn (54.3% yoy) for ‘23F consensus figures and came in above expectation at 103.5%/104.6%.

•    We reiterate BUY on INDF. Our intrinsic value for INDF of IDR8,020 implying around 7.1x ‘23F P/E, while it is currently trading at 5.6x ‘24F P/E, or below its -1SD of 6.7x ‘24F P/E.

Regards,
Akhmad Nurcahyadi - KBVS Research