Revising up Projection, Backed by Stronger Volume

For the remainder of FY24F, sales growth will be driven by higher volumes in both export and domestic markets. With a significant increase in A&P spending during 2Q24, we expect this investment to positively impact top-line performance in 2H24. Additionally, demand for herbal supplements is projected to remain robust, bolstered by BMKG's forecast of La Niña arriving in Sep-24, which is likely to boost consumption for immunity and preventive health.
In 1H24, the international business segment achieved impressive 73% YoY growth, contributing 8% to total sales, up from 5.8% in FY23. Other key growth drivers for SIDO include:
- Expanding penetration beyond Java, where ex-Java markets currently account for 30% of sales,
- Strong export potential through (1) entering new markets, with Vietnam awaiting FDA approval, and (2) enhancements in overseas distribution centres,
- Favourable raw material prices for the year for margin expansion
July's run-rate maintained double-digit growth across both domestic and export markets. Additionally, the rising export of energy drinks is expected to drive stronger contributions from the F&B segment, while herbal products, with their higher margins, will continue to hold the largest share.
Historically, 2H contributes over 50% of annual revenue. Given these positive factors and the strong earnings in 1H24, we have revised our FY24F/25F revenue forecast to IDR 4.0tn/IDR 4.4tn, and our NPAT forecast to IDR 1.2tn/IDR 1.3tn.

Maintain BUY with U/G TP of IDR890/sh

With the revised up forecast, we upgrade our TP for SIDO to IDR890/sh (reflecting PE25F of 20.0x at 5-yr-historical mean). This valuation is justified given SIDO's leadership in the herbal products market, with Tolak Angin maintaining a 72% market share in 1H24. Additionally, the company has significant growth potential both locally and internationally. Risks to our call include: weaker-than-expected purchasing power, unforeseen challenges in the export business, and unexpected increases in raw material prices

SIDO - Getting More Boost

SIDO - Getting More Boost

Ervina Salim

PT Sido Muncul Tbk

08 September 2024 - 07.00am

SIDO - Getting More Boost

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