KLBF - Expensive raw materials pressured 9M23 earnings

KLBF - Expensive raw materials pressured 9M23 earnings Kalbe Farma (KLBF)' 3Q23 revenue grew flat to IDR7.38 tn (+1%yoy/+1% qoq) mainly due to consumers' priority shifted and negatively impacted its consumer health' revenue (-27.3% yoy/-14.6% qoq). Aside from consumer health, KLBF' other segments revenue in 3Q23; a) Pharmaceutical at IDR1.91 tn (+30.5% yoy/-0.9% qoq), b) Nutritionals at IDR1.96 tn (-3.5% yoy/+1.8% qoq), and c) Distribution & logistics at IDR2.69 tn (+0.2% yoy/+7.7% qoq). As a result, KLBF' 9M23 revenue grew 6.5% yoy and came at 68.8% and 72.2% of ours and consensus' expectations.Thus, the company revised downward its 2023 revenue growth target to around 5%-7% yoy. All in all, KLBF' 9M23 net profit declined 16.9% yoy to IDR2.06 tn with 250bps yoy margin contraction due to combination of higher raw material prices, opex, inventory write-off (related to JKN) and forex loss. This came below our and consensus' expectation ( at 53.1% and 60.6%). (Source: Kontan, KBV Research)