Company Update / INDF IJ / Click here for full PDF version
Author(s): Kevie Aditya, Elbert Setiadharma
- Bogasari and agribusiness are expected to still book positive sales and earnings growth in FY20F despite ongoing coronavirus pandemic.
Solid 41.8% yoy earnings growth in FY19, in line with our/consensus
Bogasari: Another possible wheat price rally
Bogasari's revenue growth increased 8% yoy in FY19, driven by increase in ASP (largely in 2H18) while volume was flat. Global wheat price has increased by c.11% in the past 3M and may possibly increase further on the back of increased global demand for staple foods (i.e. pasta and bread), hence we may see another round of ASP increase in 2Q20 onwards to further boost Bogasari's FY20F EBIT margin (vs. 7.1% in FY19 and 6.0% in FY18).
Agribusiness: continuous improvement is well expected for 2020
Agribusiness booked Rp367bn operating profit in 4Q19 (vs. Rp169bn in 3Q19), on the back of c.23% qoq global CPO price increase to an average of MYR2,539 in 4Q19. Indeed, excitement over CPO price rebound to >MYR3,000 in Jan 2020 did not last long as it has crashed by 20% over the past 2M to currently around MYR2,300. Nonetheless, assuming average CPO price at MYR2,400 (average YTD is still at MYR2,700), we estimate agribusiness to still be able to book an operating profit of Rp972bn in FY20F, implying 96.5% yoy increase from FY19.
Valuation remains attractive at 9.4x P/E; maintain Buy
Albeit outperforming JCI,
Sumber : IPS