Company Update / Consumer Staples / ICBP IJ / Click here for full PDF version
Author(s): Lukito Supriadi ;Andrianto Saputra
- ICBP booked 1Q24 core profit of Rp3.2tr (+12.9% yoy), above our/consensus estimate at 34% vs. 5yr average of 29%.
- All segments posted positive sales growth with noodles/dairy's EBIT margin expanding by +96/+587bps yoy.
- Maintain our BUY rating at unchanged TP of Rp12,500. ICBP remains attractively valued at 13.1x FY24F P/E (-1.4s.d below its 5Y mean).
1Q24 core profit beat on improved margins
ICBP 's 1Q24 net profit registered -40.5% yoy decline, stemming from FX loss of -Rp1.1tr (vs. 1Q23's FX gain of Rp1.8tr). Stripping this aside, core profit of Rp3.2tr (+12.9% yoy) came above our/consensus estimate at 34% vs. 5yr average of 29%. Sales of Rp19.9tr (+4.1% yoy) came in-line with expectation and was driven by overseas sales' stronger growth of +6.2% yoy over domestic growth of 3.3% yoy. The core earnings outperformance was primarily derived from 1Q24 GPM improvement of +179bps yoy to 38.2%, reflecting the full impact of -16% to -18% wheat price drop in FY23.
Noodles and dairy were the key segmental drivers
Segmentally, noodles posted higher growth of +4.7% yoy over other segments dairy/snack food/seasoning's 2.6/2.6/3.4% yoy. Noodles' EBIT margin continued to expand reaching an all-time high of 27.9% in 1Q24. Similarly, dairy/beverage segments posted huge EBIT margin improvement of +587/+467bps yoy, reaching 13.1/16.5% in 1Q24.
ICBP is well insulated against US$ appreciation
As discussed in our recent note (link), we highlight that ICBP is among the more resilient staples' names in regards to Rupiah depreciation against US$. Our sensitivity analysis indicate that ICBP 's net profit may be impacted by -0.9% for every 5% US$ appreciation against Rupiah, given ICBP 's US$ revenue contribution from Pinehill.
Maintain Buy with unchanged TP of Rp12,500
In sum, we maintain our Buy rating for ICBP with unchanged TP of Rp12,500 based on 15.0x FY24F P/E (-1.0 s.d. of its 5-Y mean). ICBP has proven to be resilient during recent times of soft buying power and is attractively valued at 13.1x FY24F P/E. Key risks are sales performance and raw material price fluctuations.
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