ICBP - FY23 core profit came in-line

KBVS Update
Friday, 5 April 2024

ICBP: FY23 core profit came in-line
(Maintain BUY; TP: IDR13,140)

•    Despite its strong growth of 52.4% yoy, FY23 headline net profit came in below ours and street estimates. Yet, excluding impairment losses on investment associates, core earnings is growing at 26.8% yoy and arrives in line with KBVS/Cons at a run rate of 98.7%/98.1%.

•    The company saw solid revenue and EBIT growth across its business segmentation on a yearly basis, except for the dairy division (-3.3% yoy, 4Q23: +4.3% yoy). The company also  delivered a solid margin from top to bottom, with a GP margin noted at 337 basis points higher yoy on the back of lower input costs.

•    We expect ‘24F ICBP’s net income to be IDR 9,484bn, backed by a higher top line and EBIT growth of around 33bps and 132bps, respectively. We forecast a better noodles segment portion to total sales by 71 bps to 72.4% on the back of higher volume and ASP.

•    (The company expects its top line to hover between 5% and 8% yoy, underpinned by another year of better volume growth. Our ‘24F conservative sales for ICBP of 5.1% yoy are within the company's guidance. Additionally, it is worth noting that YTD, ICBP has not increased its average selling price.

•    Maintain BUY with a higher TP of IDR13,140. We revisit our model and make several adjustments to our assumption for ICBP’s growth. Our blended TP of IDR13,140 implies 16.2x ‘24F P/E, while it is currently trading at 13.5x ‘24F P/E, or slightly above its -2SD of 12.9x ‘24F P/E.

Regards,
Akhmad Nurcahyadi - KBVS Research team