Company Update / Consumer Discretionary / IJ / Click here for full PDF version
Author(s): Lukito Supriadi ;Andrianto Saputra
- recorded 1Q24 net profit of Rp203bn (+29.3% yoy), was slightly above our/consensus estimate at 24% vs. 3yr average of 22%.
- Expect growth to normalize in 2Q24 and beyond, but we still expect positive operating leverage as operating costs outlook is manageable.
- We upgrade FY24/25F earnings by +4/6% on strong 1Q24 sales & better tax rate. Maintain BUY with unchanged TP of Rp1,080.
1Q24 profits beat as low base effect lead to strong sales growth
's 1Q24 net profit of Rp205bn (+29.3% yoy) was slightly above our/consensus estimate at 24% vs. 3yr average of 22%. Net sales grew by +17.0% yoy on the back of 1Q24 SSSG of 13.6%, given 1Q23's low base effect.Looking forward, we expect SSSG and sales growth to normalize to single digit growth on more normalized base effect starting Apr23.
Positive operating leverage led to EBIT margin expansion
GPM was stable at 48.5% (vs. 1Q23/4Q23's 48.5/49.7%). On the other hand, EBIT margin expanded by 113bps yoy to 11.9%, as opex to sales ratio was kept at 36.6% vs 1Q23's 37.7%, resulting in net profit margin of 10.3% (+98bps yoy). Additionally, we also observed that the festive allowance (THR) is disbursed only in Apr24 and will translate to better sales in 2Q24.
FY24/25F earnings upgrade of +4/6%; clarification on FY24F tax rate
In addition to the strong set of 1Q24 results, we also obtained clarification on 's treasury shares - which planned to be cancelled off in the upcoming AGM. With that and other minor adjustments, ' free float is aimed to be at least 40% (for a minimum of 183 days within a calendar year) to ensure eligibility for the 3% tax incentive for FY24. Note however, the interim quarters' tax rate is still 22% with FY23's as the tax rate basis and adjusted only in 4Q24 for FY24F.
Maintain BUY with unchanged TP of Rp1,080
Inventory days remained high at 249 days (vs. 1Q23's 283 days) in-line with company's guidance on the needed inventory buffer to anticipate additional red tapes from Permendag Law Number 36/2023 (effective 10Mar24).Nonetheless, manageable opex growth stemming from benign wage growth of c.4% shall imply likely positive operating leverage in FY24F with EBIT margin expected to improve to 11.3% from FY23's 10.8%. We maintain our BUY call for with unchanged TP of Rp1,080 based on 21.5x FY24F PE (-0.5 s.d. from its 5yr avg). Key catalyst/risk is sales performance.
Sumber : IPS
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