Sector Update / Consumer Staples / Click here for full PDF version
Author(s): Lukito Supriadi ; Andrianto Saputra
- FY23 staples aggregate sales growth posted a mere 1.2% yoy with domestic sales registering flattish growth of 0.2% yoy.
- We like companies (, ) with meaningful US$ revenue to hedge softening Rupiah (-3.2% YTD) & turnaround narrative like .
- Expecting benign sales uptick in 1Q24F as 1Q23 was a relatively high base for most staples' revenue; maintain Neutral on Staples.
FY23: No signs of significant recovery yet for domestic buying power
Consumer staples total FY23 aggregate sales posted a mere 1.2% yoy growth, with domestic sales remaining flattish 0.2% yoy. FY23 sales achievement all fell short of the respective companies' guidance (Fig 2) and this represents the slowest growth historically. Typically, aggregate sales growth tends to positively correlate with inflation (Fig 3) with ASP adjustment becoming part of revenue growth driver; consequently, we do not expect significant ASP adjustments in FY24F. Within our coverage, managed to register the highest sales growth at +5.2% yoy thanks to its acquisition of Aventis Pharma in Nov22 and strong organic growth of unbranded generics catering to JKN. Another highlight was staples companies' export/overseas revenue fared better (except ) at an aggregate of +6.6% yoy.
Significant recovery trend still absent for most companies except
In 4Q23, aggregate staples' revenue still declined by -3.9% yoy (-1.1% qoq). Among our staples coverage, stood out with its +70.3% qoq sales recovery (although still -3.8% yoy due to high base effect). It is worth noting 1Q23 was still a high base for most consumer staples' revenue as top-line weakness was observed only starting in 2Q23 (Fig 4). Nonetheless, based on channel checks, we expect 's recovery trend to sustain until 1Q24F with potential double-digit growth. On the other hand, we expect (domestic) sales to potentially record mid-single digit sales growth and at low-mid single digit growth in 1Q24F. At the other end of the spectrum, and 's 1Q24F sales may still struggle to register positive top-line growth, in our view - with the latter still recovering from the boycott issue.
Normalizing raw material costs has led to better FY23 GPM and implies stable FY24F outlook
Consumer staples' aggregate GPM improved +366bps yoy to 37.4% on the back of normalizing raw material prices such as wheat flour, CPO and packaging costs. While expectations on raw material price outlook remain conducive for margins and the full effect of domestic wheat flour adjustment throughout FY23 shall translate favourably for FY24F, we believe that the bulk of margin improvement has been reflected in FY23. This is also supported by companies' stance on maintaining ASP given the soft buying power backdrop. As such, we expect FY24F aggregate GPM to remain fairly stable at 39.3% (+60bps yoy). On the other hand, opex looks manageable in FY24F amid benign minimum wage growth of 3.4% (vs. FY23's 10.4%).
Maintain sector Neutral with preference for , and
In sum, we continue to prefer names with meaningful export/overseas revenue in /MYOR (44/30% of FY23 sales), along with solid turnaround narrative in . Institutional ownership in consumer staples remains crowded (Fig 17-20), especially in /ICBP. In conclusion, we maintain our Neutral stance for the sector. Our pecking order for staples is as follow: > > > > > .
Sumber : IPS
powered by: IPOTNEWS.COM
