Strong Performance From All Business Segments
FY21 Earnings Beat Expectations
• SIDO's net sales grew by +20.55% YoY to IDR4.02 tn in FY21 (vs IDR3.34 tn in FY20), or 111%/103% of our target and consensus for FY21. Total revenue was supported by sales of herbal medicines and supplements with a contribution of 67% followed by 21.27% YoY growth. Subsequently, both F&B and Pharmacy segment grew by 18% and 26% YoY.
•Gross profit increased +24.32% YoY to IDR2.29 tn in FY21 (vs IDR1.84 tn in FY20). The transformation of the production process from single line machines to multi-line machines, especially for Vitamin C1000 and candy products, successfully promote efficiency and higher GPM by 1.72 pts to 56.85% for FY21.
•Operating profit rose +36.98% YoY to IDR1.58 tn in FY21 (vs IDR1.15 tn in FY20) on the back of lower general expenses and higher other income, with OPM growing to 39.21%.
•Net profit grew +35% YoY to IDR1.26 tn in FY21 (vs IDR 934.02 bn in FY20), or 111%/107% of our target and consensus for FY21, accompanied by 31.36% NPM.
•The strong FY21 performance was mainly due to growth in sales volume, given the expansion of General Trade (GT) outlets in Eastern Indonesia, followed by rising demand amid the pandemic situation.
Strategy to Maintain the Position
• Herbal medicine is expected to grow faster with modern jamu represent 53.4% of market share.
• The company targets a +15% YoY growth for both topline and bottom line in FY22E, and allocates IDR200 bn capex, which is used for additional internal medicine (COD) product facilities, thus increasing the capacity by 30% to support product demand for the Herbal & Supplement segment which is filled with a superior portfolio company (Tolak Angin, Vitamin C1000, KukuBima). In order to achieve this, the company will further maximize its distribution network and increase B2B sales.
• In FY22E, SIDO will also expand into untapped market countries, especially in China, Vietnam, Myanmar, and several countries in Southern Africa. Overall, the contribution of export sales is still relatively low at 4% of total revenue. The company projects that the company's export performance will contribute 5% - 7% of total revenue in FY22E, supported by sales of herbal and multivitamin products as well as essential oils.
• We estimate that company's FY22 performance will remain strong, supported by the potential increase in demand for the company's herbal products, especially Tolak Angin in the midst of the rising numbers of daily Covid cases. Meanwhile, stable raw material prices accompanied by an increase in ASP can strengthen margins in FY22. Furthermore, SIDO will be upscaling domestic distribution and new product development.
Maintain BUY on SIDO with TP: IDR1,100
We transfer our coverage on consumer sector, especially SIDO from Victoria Venny to Rifqi Ramadhan. We recommend BUY with TP: IDR1,100 which implies 19.88x/8.73x PE/PBV for FY22E. SIDO currently stood at 0STD PE level (average 3-years), PE at 22.96x and PBV at 6.46x. There is potential increase along with increasing public interest in consuming herbal products to maintain health.
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