Company Update / Consumer Discretionary / IJ / Click here for full PDF version
Author(s): Lukito Supriadi ;Andrianto Saputra
- suggested that Apr24 is likely to sustain the strong SSSG trend post 1Q24's robust 7.3% attainment.
- We upgrade our FY24/25F earnings by +6% on intact GPM expansion target driven by both consumer & back margin.
- Upgrade to BUY with TP of Rp3,350 as 's superior earnings growth outlook (FY23-26F CAGR :18.8%) justifies its premium valuation.
Apr24 SSSG remains robust indicatively despite high base
post results indicated that Apr24 SSSG is still going strong post 1Q23's SSSG of 7.3%, despite Apr23's high base (14.8% SSSG ). 1Q24's SSSG is mainly driven by volume growth as most FMCG companies did not implement any major ASP hikes and some companies like actually posted a negative unit price growth of -4.9% yoy in 1Q24 in their domestic sales. Our recent discussion also suggested that almost all FMCG categories (both food/non-foods had 14/8% yoy sales growth in 1Q24) registered positive growth especially beverages, snacks and personal care.
Stable GPM attainment in 1Q24 is actually noteworthy given the earlier Lebaran seasonality
Additionally, it's worth noting that 's Lebaran quarter's GPM tend to be lower with 5yr historical average registering -160bps qoq due to festive promotions during the period. Hence, considering the earlier Lebaran shift into 1Q24, the stable GPM of 21.8% (+3bps yoy) was actually quite impressive. Management believes that margin expansion outlook is intact over time - driven by both consumer and back margin (rebates from suppliers) as group continues to grab market share in the Indonesian FMCG retail industry (FY20: 13.4% to FY23's 15.0%). We expect 's GPM/NPM to improve by +21/+24bps yoy in FY24F.
FY24/25F earnings upgrade of 6.1/6.0%; Upgrade to BUY
In sum, we upgrade FY24/25F earnings by c.6% to reflect the continued margin expansion for backed by its increasing bargaining power toward FMCG suppliers. As such, we upgrade 's rating to BUY with higher TP of Rp3,350 (from Rp2,900) based on 34.0x FY24F P/E (+1.0s.d. from its 5yr mean). We view that 's FY23-26F EPS CAGR of 18.8% is superior compared to the other retailers' aggregate FY23-26F EPS CAGR of 14.6% and this shall justify the valuation premium, in our view.
Sumber : IPS
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