Saham SIDO: Industri Jamu dan Farmasi Sido Muncul Jan 21, 2021

Saham SIDO – PT Industri Jamu dan Farmasi Sido Muncul Tbk

Industri Jamu dan Farmasi Sido Muncul

Stable growth

  • We forecast 4Q20F NP growth of 16% YoY, bringing FY20F NP growth to 12% YoY; these are broadly in line with Bloomberg consensus expectations.
  • SIDO guides for another year of double-digit sales/NP growth in FY21, driven by the recovery in export sales. We project 13%/16% FY21F sales/NP growth.
  • Maintain Hold with Rp720 TP. Upside risk is a higher dividend payout (2020:90%) as dividend payments are now income-tax-free under the omnibus law.

Saham SIDO: Target Price and Consensus

We maintain the rating for Saham SIDO on hold.

Status: HOLD
Consensus ratings*: Buy 13 Hold 8 Sell 0

4Q20F preview: NP growth of 16% YoY
We forecast SIDO’s 4Q20F sales to expand 8% YoY on the back of continuous growth in its F&B and pharmacy segments. As the company has in Dec also increased the price of its flagship product Tolak Angin (c.80% contribution to herbal medicine sales which in turn contribute 64% to total sales) in tandem with inflation, this should help boost its revenue growth as well. Assuming 4Q20F GPM of c.53-54% and OPEX remained stable, we project 4Q20F NP to grow 16% YoY, bringing FY20F NP growth to 12% YoY, broadly in line with Bloomberg consensus expectations.

Analisa Fundamental Saham SIDO Financial Summary
Analisa Fundamental Saham SIDO: Financial Summary

Growth to normalize in FY21F: double-digit sales and NP
The outbreak of Covid-19 has worsened in Indonesia but SIDO does expect this to have no impact on its sales. Its ongoing marketing campaign since 2H20 which promotes the consumption of Tolak Angin to boost one’s immunity system (particularly essential during this pandemic) has boosted the demand for this product. Meanwhile, its export sales have gradually recovered since 4Q20, particularly to Nigeria and Malaysia. Tolak Angin demand remains weak in the Philippines, but SIDO has introduced new products there i.e. Tolak Angin Care and Tolak Angin Kids. The former has been well received. We forecast FY21F sales growth of 13%. SIDO expects contribution from its export sales to recover from 2020F’s 2% to 5% in 2021F. Given that raw material prices remain benign, we estimate FY21F GPM will rise 0.5% pt. We forecast FY21F NP growth of 16%.

Analisa Fundamental SAham SIDO Sector comparisons
Analisa Fundamental Saham SIDO: Sector comparisons

Maintain Hold; potential upside from higher dividend
We maintain our Hold call on SIDO with an unchanged TP of Rp720, based on 2021F P/E of 20x, 0.5 s.d. above its 6-year mean since IPO. Over the period of 28, Jan 2021 to 25 Feb 2022, the company will sell 229.78m of its treasury shares to the market in conjunction with the expiry of its share buyback program; the share buyback was in 2015. The omnibus law, which eliminates the tax on dividend income, could re-rate companies with a higher dividend payout such as SIDO; in 2020, the company had a dividend payout ratio of 90%. The downside risk is a slower-than-expected recovery in sales growth.

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