KLBF - Expects a Brighter 24F, after a weak 23f

KBVS Update 
Wednesday, 20 March 2024

KLBF - Expects a brighter '24F, after a weak '23F
(Maintain BUY; TP: IDR1,740)

KLBF has prepared several strategies for each of its business segment in 2024. Based on info, KLBF' consumer health has experienced better performance in the first 2 months of 2024 as the retailers are more boldly in stocking up its promag, as to capture the opportunity from 2024' Ramadan and Eid. Thus, we expect KLBF to be able to grow its ppharmaceuticals, distribution & logistics, nutritionals and consumer health' revenue by 9%, 7%, 6% and 6%, yoy, respectively in '24F. As a result, we expect KLBF to have a 7% revenue growth in '24F due to ASP increase and higher sales yoy.

All in all, we expect KLBF able to grow its ‘24F earnings by 15% yoy with around 70bps yoy net margin expansion due to combination of ASP increase, higher sales, better costs inputs and costs management, yoy.    

FY23F’ indicative revenue from KLBF showed us that its revenue could grow by 1.8% yoy/6.9% qoq and 5.2% yoy, respectively in 4Q23F and FY23F, on higher sales amidst the unpredictable weather' changes and the rise of new covid cases in 4Q23. KLBF’ distribution & logistics could remain as the biggest revenue contributor for KLBF in 4Q23F with a 40% revenue contribution. Followed by KLBF’ Nutritional segment, pharmaceutical segment and consumer health segment, that could contribute around 26%, 23% and 11%, of KLBF’ 4Q23F revenue, respectively.

Yet, KLBF’ net profit could decline by 21.7% yoy (+31.0% qoq) and 18.2% yoy, respectively in 4Q23F and FY23F, mainly due to high cost pressures yoy. Note that, around 70% of KLBF’ raw materials are imported and the USD has remained superior vs IDR since early 2023.    

Still maintain BUY on KLBF with lower TP of IDR 1,740/share, which implies 25.7x ‘24 P/E or at its 5 years mean P/E. We expect KLBF’ performance to recover this year due to its continuous efforts to grow its business and innovative product developments, especially after weak a performance in 2023 ( normalization from pandemic). We also adjusted down our ‘24F forecast on the possibility of KLBF’ lower earnings yoy in FY23F. Currently, KLBF is trading at 20.8x ‘24F P/E or still below its 5 years mean P/E.

Regards,
Andre Suntono – KBVS Research Team