SIDO - Weak FY23 results with a 13.9% yoy lower earnings

KBVS Update 
Tuesday, 27 February 2024

SIDO - Weak FY23 results with a 13.9% yoy lower earnings
(Re-initiate HOLD; TP: IDR665)

Industri Jamu dan Farmasi Sido Muncul' (SIDO) revenue reached IDR1.21 tn (-3.8% yoy/+70.3% qoq) in 4Q23, mainly due to the unpredictable weather' changes and the increasing awareness of health as new covid cases was higher qoq. Yet, SIDO' FY23 revenue declined by 7.8% yoy to IDR3.57 tn. Note that, historically, SIDO' 4Q sales was always higher than 3Q'.

SIDO' net profit reached IDR364 bn (-5.3% yoy/+162.9% qoq) in 4Q23. Yet, SIDO' FY23 net profit declined by 13.9% yoy, mainly due to lower sales yoy, unrealized forex loss (IDR42.8 bn) and loss on impairment (IDR35.8 bn). While, SIDO' FY23 net margins contracted by 190bps yoy, due to a much lower 3Q23' margin than expected.

We expects SIDO ’24F revenue to grow by 10% yoy to IDR3.9 tn mainly due to higher sales on the unpredictable weather changes nowadays along with this year’ festivities. Moreover, our revenue expectation is also in-line with the company’ guidance as we also have anticipated for the rising prices of basic needs, such as; rice, corn, etc, which could make the consumers to change their spending’ priority.

All in all, we expect SIDO’ 24F net profit could grow by 10.1% yoy with a stable net margin at 26.7%, mainly due to higher sales with ASP increase yoy.

We re-initiate coverage on SIDO with a HOLD and TP of IDR 665/share, which implies 19x ‘24 P/E or at its 5 years mean P/E as it offers a limited upside (+6.04%). Yet, we still think SIDO with a 10.1% yoy earnings growth expectations and a 29.4% ROE in ‘24F, is still a good company. Currently, SIDO is trading at 17.7x ‘24F P/E or still below its 5 years mean P/E.

Regards,
Andre Suntono – KBVS Research Team