GGRM - Unsurprising 9M22 result, NPAT -64% yoy

Gudang Garam (GGRM) 3Q22 shranked 69.6%549%qoq, 59.6%yoy, while cummulatively drop sharply 63.8%yoy to IDR1.49tn and arrives far below consensus expectations at 46.6%. 9M22 poor result was largerly triggered by 5.6% increase in cost of sales increase to IDR86tn from IDR71.6tn in 9M21 as a result of 6.0% higher excise duty, vat and ciug tax increase. (Source: Company) Comment: We are not surprised with the 9M22 result. We believe not only GGRM but cigarette producers will remain under pressure to maintain its growth in 4Q22. ing forward, another excise hikes could put more pressure on volume growth and margin. To pass on increasing cost to consumer at one point would lead to a low demand and hence will make growth worsen, in our view.